How Payment Protection Insurance Can Best Serve You
Payment protection insurance, or what is also known as PPI, is a type of insurance that was created to help cover individuals when it comes to an outstanding debt. It is provided to consumers by banks or another similar institution to help protect them from a debt in the instance of a sickness, job loss, death, or other accident.
In these instances, an individual that has accumulated a debt is no longer able to pay back the debt and the insurance provides protection from creditors for themselves as well as their loved ones.
One of the most common types of payment protection insurance is provided by a bank as protection against an overdraft of a bank account. This is usually offered as an add on at the time that a bank customer opens a new checking or savings account.
PPI can also be purchased after a bank account has been open for a while and for many offer the peace of mind that their account is protected in the event that one of the earlier mentioned misfortunes do occur. In many cases the PPI only offers coverage for a short period of time such as six or twelve months. After this time period is up the account holder is then responsible for the repayment.
Credit Card Protection
Credit cards are one of the most common forms of debts and PPI is one way that you can somewhat protect yourself. This works exactly like any other debt that is backed by payment protection insurance. If any of the previous events do occur then you are able to postpone, and in some cases, eliminate your debt. This will depend on what your PPI plan specifies. Many credit card companies also offer this insurance at the same time you are approved for a credit card. In many cases this insurance is included without the consumer even knowing. It is important to read any information provided with your credit card to be sure you receive a payment protection insurance that will best suit your needs.
This type of loan can also be covered by a PPI plan, but the consumer is almost always covered for a period of twelve months and afterward is held responsible for payments again. Many times when a person loses their job or becomes ill for an extended period of time, the mortgage becomes the most important debt that gets left unpaid. Having payment protection insurance for a mortgage is considered by many financial experts a necessity. This is because protecting your home should be a priority over all other debt. A house is an important investment and PPI is the best way to protect that investment.
This type of loan is probably the least commonly covered loan by PPI, but has as many advantages as covering any other type of loan. Many people use the car as their form of transportation to get to work, school, hospital, and other important places. Losing this can be devastating to many families especially in a dire time like a sickness or loss of employment. Getting PPI for an auto loan may be needed for many car owners, but for some it may be a waste.
College or Education Loan
This is also a less common loan to take advantage of payment protection insurance, especially since a majority of the individuals that take out these loans are still young and unsure about what PPI is. These are usually larger loans and can take years to pay back, so the chances that an individual needs this type of insurance is actually pretty high. An education loan that has gone into default can be a difficult process so PPI is recommended for this type of a loan.
It is important to completely understand PPI before making any financial decision and the best way to go about this is to ask your creditor to give you a complete explanation prior to taking out any loan. PPI can be a little overwhelming if you don’t understand it, but it can help save your financial future so can be the best option in many cases.
Andrew Greene is a freelance writer and blogs for ppiclaims.org.uk where you can get a ppi claim.
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