What is Payment Protection Insurance?
Payment Protection Insurance (PPI) is an insurance policy designed to cover your monthly finance repayments, if you are unable to pay them due to not being able to work. With a PPI policy, an agreed sum of money is paid out each month to fully cover (or with some policies cover a percentage of) the payment due on your finance.
A PPI policy will cover you, if you:- become unemployed, through no fault of your own
- are involved in an accident
- suffer an illness
PPI is usually taken out alongside mortgages, personal loans, credit cards or when obtaining credit on high value purchases such as cars and furniture. Retailers may also offer it to customers when they sign up for a store card.
Typically a PPI policy will cover your monthly finance repayments for 12 or possibly 24 months. After the period that is defined in your particular policy, you will have to cover the monthly payments yourself.
Not all PPI policies are the same; each individual policy will have different levels of coverage and different exclusions. However the majority of PPI policies will not cover you if you were self-employed, unemployed or retired at the time of taking out the policy. You will also not be covered under the terms of most policies, if you already had a medical condition or illness that could prevent you from working, prior to taking out the PPI cover.
PPI is also sometimes known as Loan Protection Insurance or Accident, Sickness and Unemployment (ASU) cover.
