How to reclaim mis-sold PPI
If you are concerned that you may be laid off or that an illness may prevent you from paying off your debts, you should consider Payment Protection Insurance, commonly referred to as PPI.
PPI pays your monthly debt payments if a specific qualifying event occurs, such as becoming ill, getting laid off, or being involved in an accident. Before purchasing PPI you should determine whether it is a wise investment, and if so, choose a policy that is best meets your needs.
Understand how PPI works. PPI is an insurance policy that is activated when a qualifying event occurs, such as being laid off or illness. Once you submit a claim and the claim is accepted, the insurance company makes monthly payments towards whatever debt is covered under the policy.
PPI policies last for a finite amount of time, often one year. During this time period, you will have time to find another job, sort out your finances, and/or find another way to repay your loan.
PPI policies typically make the minimum payment on your loan, especially for credit cards. PPI should be considered a “safety net” rather than a long-term debt reduction strategy.
Determine whether PPI is right for you. For some consumers, PPI offers peace of mind by enhancing financial security to carry you through significant illness or loss of income. PPI may be a good investment for you if:
You have a significant amount of debt that you will be unable to repay if you are unable to work or you lose your job.
You are employed in a profession where there is a significant possibility that you may be laid off.
You are at an increased risk of suffering from a debilitating illness.
You have no alternate sources of income, income protection insurance, or life insurance.
Decide that you do not need PPI. For some people, PPI will not provide necessary coverage and therefore is a waste of their resources. PPI may not be a good choice under the following circumstances:
You are already unemployed or retired.
You need the payments immediately. Most PPIs do not pay within the first 90 days.
You have some other way to “survive” for a period of time without a form of income (e.g. savings, a second job, sick pay, or an existing insurance policy).
You don’t have the resources to be able to afford PPI.
You are self-employed, an independent contractor, or temporary employee. Many PPIs will not cover this type of employment.
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