I’ve been offered PPI as part of my loan, but I’m not sure if I need it?
June 3, 2013
Payment Protection Insurance (PPI) exists to cover repayments on a loan if something like illness or unemployment leaves you unable to make payments. Usually, PPI covers larger loans such as car loans, mortgages, credit cards etc.
If you’re taking out a loan, you may have been offered a PPI policy and you could be wary due to the amount of media attention surrounding mis-selling.
PPI can be useful. It can cover the cost of your loan if you have an accident, or become unemployed. The majority of PPI policies can also include a ‘life benefit’ which takes care of the outstanding balance if you die.
However, PPI can be also expensive and could be automatically included if you’re not careful. Sometimes the policy may not be suitable for you, and it’s important to consider the options before making a decision.
Always ask the lender about Payment Protection Insurance. Check if it’s included, and if so, ask the lender how much extra this will cost. Always carefully check through the terms and conditions before agreeing to anything to ensure there are no surprises.
Although lenders are obliged to tell you if your loan includes PPI, they often fail to mention it. The terms and conditions will include any circumstances in which you wouldn’t be covered by the insurance, these are called exclusions. Terms and conditions are often filled with complicated jargon, so it’s always better to discuss this with a financial adviser if you’re unsure.
Often, a separate policy already in place might cover your repayments in the event of illness etc. Life insurance, income protection insurance, mortgage insurance and employment benefits could cover you should these situations occur, and PPI would be an unnecessary extra cost.
If none of the options above apply to your situation, you may be more comfortable with the security of a PPI policy. Be sure to shop around first. Whilst it may be more convenient to take out a policy with the same lender, you might save yourself a considerable amount by obtaining alternative quotations.
Like any type of credit, Payment Protection Insurance requires plenty of attention to the terms and conditions. Often overlooking small personal details which may seem insignificant will invalidate the policy in the event of a claim, so it’s often a good idea to speak with a finance professional for advice.
Why not call Scotland Debt Solutions today? One of our experienced colleagues can assist you in working out the most suitable option to ensure you’re repayments stay protected.
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