In 2005 the Financial Services Authority began an investigation into the payment protection sector. This was after a super complaint to the Office of Fair Trading from the Citizens Advice. It was found that consumers were getting a poor deal when it came to payment protection insurance and in some cases individuals who could not claim against a policy had been sold the cover.



There is no doubt that protection insurance is an extremely valuable product to have. It is taken out to guard against the fact that you could become unable to work due to accident, sickness or unemployment. In these cases, it would provide a tax free monthly income to help towards your credit commitments until you are back in work.

While it can be a safety net the product is not suitable for all circumstances and you have to check yours before taking out cover. If you are self-employed, retired, suffering from a pre-existing medical condition or only working for a few hours per week then the insurance might not be suitable. These are just the exclusions which are most frequently found in a policy and providers can add in others.

If you have checked to determine you could benefit from payment protection insurance cover then getting a quote from a standalone provider will help get you the cheapest premiums. The amount you pay for protection will be determined by your age and the amount you wish to protect each month.

Payment protection insurance can make a huge difference to your recovery. If allows you to relax and get well again or find another job knowing you are not struggling where to find the money to continue servicing your loan. A policy would generally start to provide you with a tax free income once you have been out of work for between 30 and 90 days. This is dependent on the provider and can be found in the terms and conditions along with the exclusions. Your income could continue for between 12 and 24 months again depending on the provider. This is generally enough time to get well and be able to return to work or to find alternative employment.

Payment protection insurance will be offered by the high street lender at the time of borrowing. While this is often seen as the easiest way to take out cover, it is generally more expensive. In some cases the insurance is added onto the cost of the borrowing that you have taken so always check to make sure you are not already paying for cover. Another big problem with taking a policy this way is that often very little information is given about the product you are buying. High street lenders can lack the necessary training to sell payment protection insurance and it is the poor selling techniques which have been high lighted during the ongoing investigation.

While it does not hurt to get a quote alongside your borrowing you do have to be sure that you qualify for a policy. Then go to a standalone provider and get a quote from them too. You can also take advantage of the information and advice that an independent provider will give and this is the easiest way to decide if a policy is suitable for your needs. In the majority of cases you will find that the payment protection insurance offered by the high street lender can almost double the cost of the loan, so it is worthwhile getting a second quote.