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Payment Protection Insurance (PPI) Guide

Author : Callum Leslie Walters

There has recently been much in the news about payment protection insurance (PPI) and how many people have been mis-sold it. There has, however, been very little in the way explaining exactly what it is or what its purpose was intended to be. That is what this guide looks at. Firstly, the 'aim' of PPI was to enable people to pay their bills on time even if they were unable to - it was insurance so that, if they defaulted for some reason, they could still pay.

A whole range of financial products have come with payment protection insurance attached to them for many years, but it has also been available from insurance companies without necessarily being attached to a particular financial product. Typically, though, PPI is normally sold by the bank or other financial lender used by the customer. This is why it has frequently been sold with mortgages and credit cards as well as a host of other things that require loans or credit and the customer to make payments.

There have been quite a few issues over exactly who is eligible for payment protection insurance and many people who weren't even eligible for it were still sold it by various lenders. For example, quite a few unemployed people were sold PPI even though if you were unemployed when you took out the loan, it shouldn't have been offered to you. Also, a lot of people thought that they were eligible but then when they tried to make a claim, were denied.

In theory, if you need to make a claim on your PPI plan, you will need to get in touch with the lender who sold it to you and inform them of your need to make use of the insurance. For instance, if you have been made redundant or have had an accident that has left you unable to work, you will need to inform them of the circumstances and offer proof that you are telling them the truth. They should then process the claim for you.

It is very important to be careful with the issue of payment protection insurance, however, as it has often been mis-sold and people have subsequently been rejected from using it when they tried to make a claim. Also, a lot of people were sold PPI without even knowing that they had been given it, often shelling out a lot of money for a service they didn't want or need in the first place. This is why vigilance is always so important with financial matters.

*Disclaimer* This information should be used as a guide only and should not be relied upon as the sole source of information on this issue. We cannot be held responsible for any loss, inconvenience, damage (whether special or consequential) or claims arising out of the use of this information.

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Find Out More : Lloyds TSB PPI Claims

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Tags:   insurance, personal finance, finance

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Submitted : 2011-07-08    Word Count : 870    Times Viewed: 458