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What is PPI : Things You Need to Know about It

Are you falling behind load or credit card payments, mortgage, penalty charges, even potentially losing your home or damaging your credit score? 

PPI has been created to assist consumers to avoid such occasions by reimbursing the credit card bill. It also offers certain relaxations on mortgage or loans, in case you have lost your job or fallen sick. 

But, the terms and conditions of the cover serve to be quite tough and might suggest various exclusions. Often, banks are blamed for mis-selling policies to people who can’t make a claim or realize they were taking out cover. 

Also, several lenders or banks have been confiscated for low PPI sales practice and directed to return the allowance to all those mis-sold policies. Therefore, a number of consumers discontinued availing PPI. 

Learn what is PPI

The PPI stands for Payment Protection Insurance. Actually, the PPI is an insurance plan which secures the payment capability. In other words, PPI is also similar to loan repayment, credit protection insurance, or credit protection insurance. 

This insurance product allows consumers to insure repayment of loans if the borrower or consumer becomes ill, dies, or loses a job. It is also applicable to those who experience other circumstances that might restrict them from earning income to pay the debt. 

It is not to be confused with income protection insurance that does not mention debt, however, it covers any income. The PPI is extensively advised by lenders or other credit providers as an overdraft product or add-on to the loan. 

Besides, credit products can be bought to guarantee all kinds of consumer loans including home loans, car loans, loans from finance companies, etc. Credit card agreements might include a form of a PPI cover as standard as well. 

Despite the policy being bought by the consumer or borrower, the advantage paid in the event of a claim goes to the organization that extended credit to the consumer. 

However, the policies can be accessible in order to cover particular categories of risk such as credit disability insurance, credit life insurance, and credit accident insurance. 

So, the PPI is quite different from the other types of insurance like home insurance. Therefore, it is quite difficult to understand whether it is accurate for a person or not. Hence, the correct estimation of what will appear if a person becomes jobless requires to be considered during this insurance. 

Moreover, the payments in lieu of notice may render a claim inappropriately although if the person becomes jobless genuinely. 

How to Determine if you can have PPI?

If you ever have any of the following things in the past, then you might be sold PPI with them:

  • Store cards
  • Credit cards
  • Personal and secured loans
  • Business loans
  • Overdrafts
  • Flexible loans
  • Point of sale loan (appliances or furniture)
  • Hire-purchase agreements
  • Catalogue shopping accounts

If you are still getting your credit statements or agreements, you have to check whether the PPI is specified on them. Besides, certain businesses utilize different names for PPI that might include:

  • Mortgage care
  • Creditcare
  • Loan guard
  • Credit card repayments cover
  • Payment protection cover
  • Credit Card
  • Credit repayment protector

The work you are reporting to may inform that you didn’t have the PPI policy. This situation might arise if any of the following takes place:

  • Their records do not display that the policy was sold
  • They do not have sufficient details in order to track down all the necessary details of the PPI policy
  • The credit was taken out so long therefore, there is no past information or relevant record

Types of Reports Often Enlisted with Mis-selling PPI

There are some reports that come up most often regarding the mis-sold PPI. This can be observed with the consumers who:

  • Did not want the policy
  • Were not aware that they had the policy
  • Suggested to take the policy that was not completely compatible
  • Felt not comfortable to take the policy (for example- if the consumers or borrowers do not take the PPI, they will not get the credit card)
  • Were recommended to get the policy that was unsuitable (for example, self-employed customers are recommended to take the policy even it is difficult)
  • Not made aware of the fact that the policy did not cover certain things. 

Do you Require PPI?

If you are unable to keep up with debt repayments due to certain circumstances, the PPI becomes the commercial lifeline of you. Whether or not you require this policy, it will completely depend on your financial circumstances. 

So, if you are worried about stabilizing your financial condition if you had an accident or lost your job, PPI will give you peace of mind. 

Here, you need to be sure that you are eligible and not increasing the cover provided by your employer. So, those who can’t get PPI payouts involve people who are self-employed or do not work. This is when multiple insurers will decline claims because of their uncertain situations. 

In fact, consumers who can demand will require some savings in place to include disparity between any redundancy or accident. 

Know your Rights About Payment Protection Insurance

A number of consumers have already got the allowance as they were mis-sold PPI policies. So, more than 180,000 cases are specified to the Financial Ombudsman Service in recent years. In fact, several cases are under review. 

Therefore, if you have been mis-sold PPI alongside your store, credit card or loan, try to write to the bank or lender concerned. Keep in mind that the approximate client payout for loan PPI compensation is around £2,000 in the UK. 

However, if you are not confident with the lender’s response or if it failed to reply within the mentioned time, you can move towards the Financial Ombudsman Service. 

What are the Reliable Ways to Claim PPI? 

Follow these details in order to know all the reliable ways to claim PPI.

  • Attempt to locate all the relevant documents and make copies of them. It can include whatever that indicates you have taken a policy and shows you making the payments for it. 
  • Send a letter to the mortgage, credit card or loan provider who sold you the PPI. If you utilize the Money Advice Service PPI template letter, it should not take too long to do so. Here, you have to describe the exact cause why you think you were mis-sold PPI and also send all your relevant documents.
  • After sending the letter, if you do not get a proper response within the mentioned eight weeks, you can send a report to the FOS (Financial Ombudsman Service). 

Other Types of Insurances to Consider

Payment Protection Insurance helps to secure repayments when you have borrowed money. However, there are various forms of insurance to help cover your incomes if you can’t work.

STIP refers to short term insurance. It can cover your necessary outgoings for up to a year. 

IP stands for Income protection insurance, which may cover a wide range of disabilities or illnesses. It also gives maximum cover for a longer period of time.

Further Queries that you might have While Claiming PPI

Follow up with the undermentioned information and put an end to your further queries related to the PPI.

  • Can Consumers Claim PPI on Unpaid Debt?

Consumers can claim PPI compensation if their account is in the proper area. The main fact they are struggling to pay the debt has to bear on whether they are mis-sold PPI. Besides, any compensation paid additionally will enhance the balance they owe and freeing them from the debt sooner.

  • Is Mortgage Protection Insurance the Same as PPI?

Although these two terms sound quite similar, the mortgage protection insurance is not the same as the PPI or payment protection insurance. PPI only ensures to cover payments and finance that are made to the lender or bank. But, mortgage payment protection insurance only covers the mortgage payment. 

  • Why your PPI Claim is Rejected?

A claim might be rejected because of the insufficient evidence provided to the lender or bank. If you face such kind situations, you might require to render more evidence to the lender or bank. The more proof and information included with your claim, the more likely the lender will endorse your complaint.

  • What is the Average PPI Payout on a Successful Claim?

According to the FCA or Financial Conduct Authority, the average PPI payout on a successful claim is  £1,700. So, it is necessary to note that many people have made PPI claims. Therefore, your refund can be much higher or lower in comparison to them. However, you can’t determine it unless you make a successful claim.

  • Will PPI Refund Count as Income?

If you are not paying tax or still under your free tax allowance, then there is a form to claim it back from HMRC. In fact, the interest will be counted as income for tax credit purposes but, not for the PPI refund purposes.