Payment Protection Insurance, or PPI for short, is a type of cover that is often sold alongside credit cards, mortgages and personal loans. It ensures that the minimum monthly repayment is covered if you are unable to work due to redundancy, accident, or illness. It can be very useful, but it is not always necessary. For example, if you are employed full time, you might want to find out what your entitlement to sick pay is first. In the event of your redundancy, you might get enough redundancy pay to tide you over until you get another job.
You do not have to take out insurance when you take out a loan, and lenders are not allowed to refuse you a loan because you do not take out PPI. However, it is different with mortgages, and many lenders will demand that you have life insurance before they agree to lend you the money to buy a property.
Many people will be better off with income protection insurance, which pays a portion of your salary if you find yourself unable to work for a spell. A typical PPI policy will not begin to pay out until one month after your income stops, and will run for a set period such as a year or two years. The majority of policies will not cover certain common conditions such as stress and back problems. Also, you will not receive a payout if you are unable to work due to the deterioration of a pre-existing condition.
Most PPI policies are monthly, which means that you have to pay the premium once every month. It also means that you can cancel at any time, so if you have a policy, and you decide that you do not need it after all, then you are under no obligation to stick with it, and you should incur no extra costs for doing so. Even if you paid for a year’s insurance in one go, you should still be entitled to a refund if you cancel before the end of the policy. For great deals on personal loans, with or without payment protection insurance, visit the Santander website, where you’ll also find a wealth of information on mortgages, bank accounts and Santander personal loans.
