Payment Protection Insurance Cover

Payment Protection Insurance (PPI) has been the source of some controversy, since some lenders continue to offer it to loan applicants who are ineligible to claim on their policy. For example, some lenders have missold policies to the self-employed which do not allow them to claim against periods of unemployment. Many other lenders simply failed to inform applicants that the insurance was an optional extra. It is important to gain all available information before taking out an insurance policy, to check that you have the appropriate cover for all eventualities. Things to consider might include for which situations you can (or cannot) claim, the period of time that must have elapsed before you can make a claim, and the length of time that the cover lasts for.

If you consider that PPI is too expensive for you, or increases the overall cost of your loan by an unreasonable amount, you may wish to consider other ways to protect yourself. Many people benefit from making regular contributions into a savings account, which can be used to cover repayments if the need arises. If you are able to meet your repayments, you can use your savings for another purpose. Remember however that you will need to be a disciplined saver; failure to contribute regularly to your savings will leave you without a contingency fund if you run into financial difficulty.