Have You Ever Bought Payment Protection Insurance?
by: shaun Total views: 11 Word Count: 822
Millions of borrowers take out payment protection insurance (PPI) to provide security and reassurance for times of crisis and help upkeep their payments on loans, mortgages and other commitments in the event of accident, sickness or unemployment.
The PPI market is massive, around seven million policies are taken out annually. This business generates an incredible £5 billion in premiums for the lenders and the insurance companies offering these products.
If you have ever taken out personal loans, mortgages or almost any credit agreement recently you will probably have encountered payment protection insurance, PPI can be a lifesaver for some people.
On the other hand statistics provided by the government reveal only 4% of people who take out PPI on their credit agreements ever claim on their policies and that 85% of those claimants is refused their claim.
About 60% of payment protection policies are sold in conjunction with unsecured personal loans, with the remainder being related to credit card, secured loans, store card and mortgage borrowing.
Up to 85% of claims made by PPI holders fail, many due to the policy being miss sold or unsuitable for the individual.
An example of missold PPI
Mr Merrell wanted a loan for £3,000 the loan company gave him a loan of £2,062.57 of which Mr Merrell only received £1,500 the other £562.57 was taken from the loan to pay for PPI,
The loan repayments still incurred interest on the amount for PPI which meant that in total £3,930 had to be repaid, then a change of circumstance meant Mr Merrell became self employed.
Just before christmas the loan company offered him another loan again without asking they added PPI this time fully aware of the fact that Mr Merrell was self employed this meant that should Mr Merrell find himself unable to pay the premiums set through lack of work he would not be entitled to claim against his PPI policy.
As this is a clear case of Payment Protection Insurance misselling Mr Merrell is pursuing his complaint through us. PPI misselling facts and figures
We have done some research into PPI and the impact financially it has on the consumer, the table below displays some of the more major players in the credit industry and gives an example of some of their payment protection exclusions and terms. You can see that if you had to stop work due to a bad back with Capital One you would be excluded from making a successful claim on your PPI.
Payment protection insurance has grown into a major industry, with 20 million policies in existence in the UK and about seven million new ones sold each year.
Total premiums have grown by an average of 18.8 per cent a year for the past five years and were about £5.5 billion last year.
A borrower taking out PPI on top of a loan typically adds 13 to 56 per cent to the total cost of the finance.
Each year over 450,000 consumers make claims on PPI policies - according to Citizens Advice Bureau research, 85% of claims are unsuccessful, in stark contrast to industry claims that the figure is only 15%.
About the Author
For more information about how this situation could affect you visit Compensation PPI on the world wide web.
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