Payment protection insurance – choosing a policy

Money Advice Service

Payment protection insurance, also known as PPI, can help you keep up with a loan or credit repayment if you are made redundant, or find yourself unable to work due to illness or accident. Finding the right policy can provide you with the reassurance that you will be able to meet the repayments in the short-term if something goes wrong. You might decide to get professional advice from a financial adviser to help you choose a policy.

PPI policy features

Not sure what something means? Have a look at our Protection insurance glossary.

PPI policies might seem complicated, but it’s important to understand what you’re signing up to. We’ve put together a list of the main points you need to consider.

Length of pay out

The longest possible time a PPI policy will pay out is up until the policy ends.

The shorter this period of time the cheaper the policy will be. It will also stop paying out if you become well enough to go back to work.

If you take out a PPI policy to cover a credit card debt and then get made redundant, your policy will cover monthly repayments for that debt.

It will continue to pay out until you find a new job, or the policy ends.

Amount of pay out

You choose a policy which pays out a set amount to cover the loan or credit repayment that you have taken out.

For example, if you decide to cover a loan for a car over five years and then become ill and unable to work, your PPI policy will cover your loan repayments.

It will do this until you start earning again, or the end of the policy in five years.

What do I need to think about before buying PPI?

Factors that influence the cost

  • age
  • the amount you want to cover
  • how long you want to be covered (term)
  • whether you smoke or have previously smoked
  • occupation – the more manual or specialist the higher the cost
  • health (your current health, your weight, your family medical history)
  • the excess waiting period before you’re paid (deferred period) which is usually 90 days (see When does it pay out? below).

When does it pay out?

PPI policies usually pay out after 90 days. This period is known as an excess or waiting period.

You need to make sure that you could cover your loan or credit repayments during this time.

You might be able to do this through:

  • your savings
  • your employer’s sick pay
  • your statutory sick pay (six months).

Who wouldn’t be covered?

If you’re unemployed (and have not been made involuntarily redundant) or retired when you submit a claim it is unlikely to be paid.

If you’re self-employed or a contract worker there might be some additional conditions in the policy that you’ll need to meet.

For example, you might be asked to provide more evidence about your income. Check the policy wording carefully if this is might to apply to you.

Pre-existing medical conditions

Most PPI policies do not ask for your medical history when you take the policy out but pre-existing conditions, (that is health problems that you had before you took the policy out) are not usually covered.

Claims support services

Some policies include claims support services which provide help and support, such as helplines and information about your medical condition or legal advice in the event of a claim, to help return to work as soon as possible.

Getting advice

Most complaints about PPI are about whether or not it was the right type of policy to have taken out.

Advisers can take you through the details of the policies available and make sure you pick the one best suited to your needs.

This article is provided by the Money Advice Service.

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Accuracy of Information – We try to make sure that all the information provided on Rest Less Money is correct at the time of publishing as we want it to be the most helpful resource possible. Sadly, we are not perfect however, and so we can make no guarantees as to the completeness, accuracy, adequacy or suitability of the information available on the site.
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We hope you find Rest Less Money a useful resource and we would welcome your feedback at [email protected] on how to make it even better. For more information on any of the above you can read our full terms and conditions.

Some important information about Rest Less Money

We want you to understand the positives, but also the limitations of using our site. We operate in a journalistic manner and therefore all information, guidance or suggestions provided are intended to be general in nature, and you should not rely on any of the information on the site in connection with the making of any financial decision.

When we set out to build Rest Less Money, we wanted to be a trusted place where you could find helpful information about financial matters affecting the over 50s. As a free to use resource, we try hard to provide the best information we can, but we cannot guarantee that we won’t occasionally make mistakes. So please note that you use the information on our site at your own risk, and we can’t accept liability if things go wrong.

Key things to remember when using Rest Less Money:

We do not offer financial advice – As a journalistic site, it’s important to know that we do not provide financial advice. You should always do your own research before choosing any financial product so that you can be certain it is right for you and your specific circumstances. If you are in any doubt, please seek professional financial advice from a regulated financial advisor.

No Liability – please note that you use the information on Rest Less Money at your own risk and we can’t accept liability for how you choose to use the information given on our site. We will often provide links to content or products and services available on other third-party websites. These are provided purely for your convenience and we cannot be held responsible for any content, or any of the products and services offered on any website that we link to.

 

Accuracy of Information – We try to make sure that all the information provided on Rest Less Money is correct at the time of publishing as we want it to be the most helpful resource possible. Sadly, we are not perfect however, and so we can make no guarantees as to the completeness, accuracy, adequacy or suitability of the information available on the site.
Whilst we work hard to try and provide accurate information, deals and prices can change, so whilst they may be correct at the time of writing, providers may subsequently decide to alter them later – so always double check first.

A final note on the Rest Less Community Forums – always remember that anyone can post their opinion on the Rest Less Community Forums, so it can be very different from our own opinion and may not be factual or well researched. Always be wary of any content posted on the forums and be sure to do your own research and due diligence on anything suggested. 

We hope you find Rest Less Money a useful resource and we would welcome your feedback at [email protected] on how to make it even better. For more information on any of the above you can read our full terms and conditions.

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