The number of PPI claims are on the increase. But what is PPI?
This is generally sold to cover repayments on unsecured loans, such as credit cards in the event of unemployment. The Financial Services Authority said it sees the need for ‘appropriate protection insurance’ in the present economic environment. But added that it was seriously concerned about the sale of single premium Payment Protection Insurance, where the price of the insurance - frequently thousands of pounds - is added to the loan and then interest charged on this amount. The managing director of retail markets with the Financial Services Authority said they were pleased these Banks have stopped selling single premium policies, and that they hope other firms would review their positions. So long as PPI policies are sold appropriately they can be helpful to customers wanting protection on a specific credit agreement.The Association of British Insurers believes that PPI is an extremely valuable product, if sold properly. During last year unemployment claims on these insurance policies soared by 113 per cent compared to the year before. This appears to be a fashion that will continue. When they take out a PPI policy the customer needs to understand what it costs and what it covers. The Association of British Insurers and its member companies have been working with the regulator to ensure this happens, so that they can make an informed choice.Payment protection insurance covers our unsecured loans and credit card card repayments should we become unemployed, however there are other types of protection insurance which are also extremely important. Life insurance is a particularly important protection insurance, as this protects families, should an untimely death occur.