Do your homework when it comes to choosing PPI

Buying a loan, mortgage or income protection policy from your lender is not compulsory. You are free to shop around for an alternative, if you wish, and if you do so, you could save yourself literally thousands of pounds over the term of your borrowing.

The major high street lenders make huge profits from the sale of protection insurance. These profits often counteract their loss of profits on their ‘cheap’ loans, mortgages and credit cards.

So, what they give with one hand, (eg a cheap loan) they take straight back – and more – in the other (with pricey protection cover).

The key is to do your research and not feel pressurised in to taking the lenders' own quote for protection insurance. By all means, do get a quote from them and a copy of the product's key features so that you can see the terms and conditions of the policy, but then look around.

The internet is an ideal place to do your homework. Companies such as the ethical BritishInsurance.com have an easy to navigate website that allows you to read about the different protection products available; get a free, no-obligation quote instantly; and then, buy online.

Prices start from just £2.45 per £100 of monthly benefit with 3 months’ free cover for mortgage payment protection insurance; for loan payment protection insurance prices start from at £2.50 per £100 of monthly benefit and offer back-to-day-one cover; and, for income payment protection insurance, prices start from just £3.00 per £100 of monthly benefit with back-to-day-one cover.

Shop around for cover and know the difference between a rip-off policy and the right-priced policy.