In recent years, media attention around PPI, or Payment Protection Insurance has increased drastically. For a time, loan providers were delivering this insurance to customers without asking whether they really needed it. Some people even discovered that they were paying for the protection without being aware of it. However, just because PPI hasn’t had the best reputation recently, doesn’t mean that it’s never a good idea. Ultimately, this is just another tool available for consumers to help them protect themselves and their cash as they move forward with various lending products. The key to success is making sure you understand this coverage and what it can offer, before you apply for it.
How Does Loan Protection Work?
Payment insurance is a kind of protection offered for various kinds of lending products. You can see your different options online when comparing personal loans from private lenders. Some offer this extra coverage for a very low additional fee. Ultimately, the product works by giving you an additional monthly cost to pay alongside your loan repayments.
The insurance will help you if you ever find that you’re not able to pay your monthly repayments due to various things, like a sudden inability to work, or sickness. This can be a good idea for people borrowing large amounts of money, particularly if you’re not sure what your earning potential might be going forward. The insurance will pay out when you’re unable to manage the expenses associated with your loan. This could protect you from various difficult situations where your loan providers may need to add extra fees to your repayments, or even take you to court for not paying on time.
Though many people complained about having PPI in the past, this was usually because they were sold the service without receiving information about it. There were also those in the loan space who were paying for insurance that they wouldn’t have been able to use even if something did prevent them from making repayments.
Should You Get Payment Insurance?
Only you can decide whether this kind of coverage is appropriate for you or not. It might be worth taking some time to look into your current loan and find out whether you’re already covered by another form of insurance policy. For instance, if you have income protection, you’ll be protected against losses in the event of accident or illness even without PPI. You’ll also need to determine whether you’re going to feel more secure with this kind of insurance.
Notably, it might seem like this kind of coverage is ideal for you if you’re self-employed, as you might not know whether you’re definitely going to have cash coming in each month or not. Unfortunately, the reality is that most forms of PPI aren’t applicable to people who don’t have a certain level of employment. It’s important to check all the terms and conditions of your insurance before you jump in and apply for it alongside your loan. Asking any questions you might have in advance will save you a lot of headaches.