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[P147]Payment Protection Insurance Claims

by Simon Burgess, Sim

If you want complete peace of mind that if you should lose your income you would not be left struggling each month, then you need to give some consideration to payment protection insurance. This type of insurance would cover a range of essential payments that you have to keep up with each month. Policies would cover against the possibility of you losing your income after becoming unemployed due to reasons not of your own such as by being made redundant. It would also protect against the possibility that you might not be able to work if you were sick or suffered an accident.

For instance if you have mortgage repayments that have to be kept up with then you could consider taking out mortgage payment protection. This would ensure that you would have the money needed each month to be able to pay the mortgage payment when it was due. You would not have to worry about falling behind on your mortgage and of the lender choosing to repossess your home.

Debts such as loan or credit card repayments also have to be kept up with and you are able to do this by covering them with loan payment protection. A policy can be taken to insure up to a certain amount of your loan or credit card repayments each month to make sure that you do not get into debt with them. Getting behind on loan repayments can see you being taken to court by the lender and this means at the very least your credit rating would be affected and the worse situation would see you obtaining a County Court Judgement and possibly having bailiffs take possessions of yours to sell.

If you are worried about being able to meet all of your essential bills each month then income payment protection can be taken. With this type of insurance behind you there would be no worry about missing mortgage repayments or loan repayments and you would also be able to keep up with all your other outgoings each month. You can insure up to so much of your income, all providers will put a limit on the amount you are able to insure each month and then you get this back. With the cover you are able to keep ahead with your bills and this leaves you free to find work if you are unemployed or to make a recovery.

The premiums for all payment protection insurance are based on how much you choose to protect, your age and with mortgage insurance whether you choose to cover against all three eventualities or just need accident and sickness cover only or unemployment only. You would then pay the premium each month and if and when you needed to claim wait the period of time set out in the policy before claiming.

Providers usually ask that you wait at the least 30 days and with some providers for up to 90 days before claiming on your payment protection insurance. The policy would the provide your tax-free income for the time set out in the cover which is usually either 12 months or 24 months. After this your policy would end but generally it is more than adequate enough time to have recovered or to have found work again.

Payment protection insurance (PPI) can be a very valuable product to have in your corner but it isn't suitable for everyone and the product had seen many problems when the Financial Services Authority began investigating the sector in 2005 after a super complaint was made to the Office of Fair Trading by the Citizens Advice.

Following the complaint an investigation began and the Financial Services Authority (FSA) handed out fines to several well known names on the high street for mis-selling payment protection insurance. The mis-selling from mainly high street lenders was due to them selling policies to those who couldn't possibly hope to claim against them such as those who were retired or self-employed.

The sector payment protection insurance sector is currently under review by the Competition Commission and they are conducting an in-depth review of the industry which is expected to reach conclusion in February 2009. The FSA is also still investigating and during the latest round have found that while some improvements have been made the cover is still confusing to the majority of consumers. Consumers often don't realise how much the total amount of the protection will cost and aren't aware of the exclusions within a policy at the time of buying. While fines were handed out to firms the FSA are now handing out personal fines to Chief Executives who have continued to mis-sell protection despite the warnings.

Payment protection insurance when bought correctly can give you an income if you should find yourself out of work due to suffering an accident, sickness or through unemployment and would begin to payout between the 31st day and 90th day of you being out of work continually. It would then continue to give you tax free income for up to 12 months and with some providers for up to 24 months to ensure that you don't get into debt by falling behind on the repayments.

Some of the most usual exclusions which can be found in the small print of a payment protection insurance policy include being of retirement age, self-employed, suffering from a pre-existing medical condition or if you only work part time. Always check the key facts and exclusions of a payment protection insurance policy before you buy to ensure that it wouldn't let you down in your time of need.

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Simon Burgess has sinced written about articles on various topics from Mortgage Insurance, Finances and Income Protection Insurance. Simon Burgess is Managing Director of the award-winning , a specialist provider of. Simon Burgess's top article generates over 74000 views. to your Favourites.