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Do you need PPI?

With the payment protection insurance (PPI) selling scandal still making headlines, it can be difficult to see if there is any advantage to having this type of policy.

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If you are taking out a loan or credit card, and PPI is offered to you, how do you know whether to accept it or not?

Before signing up for PPI, consider it carefully whether you actually need more insurance cover.  

Ask yourself these key questions:

If you lose your job, can you afford to keep up repayments?

Some people have savings or other policies that would kick in should this happen. For example, do you have;

  • Life insurance
  • Another type of illness policy such ascritical illnessor anincome protection policy
  • Benefits such as sickness or redundancy benefits with your employer
  • An insurance combined with your mortgage

If you do have the above, then you may not need PPI.

How much will the policy cost?

The cost of a PPI policy can be notoriously high, with very little level of cover offered in return. It can significantly add to your loan repayments or credit card debt and, as with all financial products, it really does pay to shop around.

Similarly, the more a policy offers, the more expensive it will be.

How long does the policy pay out for?

Many PPI policies only pay out for a set length of time such as for the first 12 months of any claim.

Most PPI policies will also have a 'waiting period' when it comes to making a claim, so you may find that you will still have to meet repayments for a month or so, before the policy 'kicks in'.

Are there any exclusions?

Many customers seeking PPI compensation are doing so because of them not being made aware of significant exclusions under the terms and conditions of the policy. If you have a medical condition, for example, you may find that it will be excluded from any claim that you may make. If it is included under the policy, you may also find that this substantially increases your policy premium.

It pays to shop around when it comes to payment protection insurance but if you think you have been mis-sold PPI on loans and product in the past, you can contact PPI Scotland for help and advice on how to make a claim for compensation.

Do I need to buy it now? Why can I not buy a policy independently?

The best way to buy an insurance policy is to take your time to find one that offers the cover you need, for the price you can afford to pay. If the sales rep. insists you buy it now, walk away because this is not how financial products should be sold.

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