What is payment protection insurance (PPI)?
Payment protection insurance (PPI) is a type of insurance that is designed to cover loan or credit card payments in the event of the policyholder’s death, disability, or unemployment. It is often sold as an add-on product when a loan or credit card is issued.

How does PPI work?
When you purchase a PPI policy, you pay premiums to the insurer in exchange for coverage. If you experience a covered event, such as death, disability, or unemployment, the insurer will pay a benefit to help cover your loan or credit card payments.

The amount of the benefit and the terms of coverage will vary depending on the policy. Some policies may only cover a portion of the payments, while others may cover the full amount.

Why might someone consider PPI?
There are a few reasons why someone might consider PPI:

To protect their credit score: If you are unable to make your loan or credit card payments due to a covered event, PPI can help you avoid default and protect your credit score.

To provide financial security: PPI can provide financial security to policyholders and their families in the event of a covered event.

To meet lender requirements: In some cases, lenders may require PPI as a condition of lending.

Are there any drawbacks to PPI?
PPI can be a useful product for some policyholders, but there are also some drawbacks to consider:

PPI can be expensive: Premiums for PPI can be significantly higher than other types of insurance, making it a costly add-on to a loan or credit card.

PPI may not cover all circumstances: PPI policies may exclude certain events or circumstances from coverage, such as pre-existing medical conditions or self-employment. It’s important to carefully review the policy and understand what is and is not covered.

PPI may not be necessary: Some policyholders may not need PPI, particularly if they have other sources of financial protection, such as disability insurance or an emergency savings fund.

How do I know if I have PPI?
If you are unsure whether you have PPI, you can check your credit card or loan statements for information about PPI premiums. You can also contact your lender or credit card issuer to ask if you have a PPI policy.

Can I cancel my PPI policy?
In most cases, you have the right to cancel your PPI policy at any time. However, you may not be entitled to a refund of premiums if you cancel the policy before the end of the term.

What is PPI mis-selling?
PPI mis-selling is the practice of selling PPI to customers who do not need or want the coverage, or who are not eligible for coverage. This can occur when PPI is sold as a mandatory requirement for a loan or credit card, or when policyholders are not fully informed about the terms and exclusions of the coverage.

What are the consequences of PPI mis-selling?
The consequences of PPI mis-selling can be significant. Policyholders may be paying for coverage that they do not need or want, and may not be aware of the exclusions in the policy. This can lead to financial hardship and frustration for policyholders.

In addition, PPI mis-selling can damage the reputation of the financial institution or insurer involved and lead to regulatory action.

How do I know if I have been a victim of PPI mis-selling?
There are a few signs that you may have been a victim of PPI mis-selling:

You were not told about the policy: If you were not informed about the existence of a PPI policy or were not given the opportunity to opt out, you may have been a victim of PPI mis-selling.

You were not given a choice: If you were told that PPI was mandatory or that you had to purchase it in order to obtain a loan or credit card, you may have been a victim of PPI mis-selling.

You were not told about exclusions: If you were not informed about exclusions in the PPI policy, such as pre-existing medical conditions or self-employment, you may have been a victim of PPI mis-selling.

What can I do if I have been a victim of PPI mis-selling?
If you believe you have been a victim of PPI mis-selling, you may be entitled to a refund of premiums. You can file a complaint with your lender or insurer, or with the Financial Ombudsman Service (FOS) if you are not satisfied with the response you receive.

It’s important to gather evidence to support your complaint, such as copies of your credit card or loan statements and any documentation related to the PPI policy.