When you take out a loan (or any other credit for that matter) you will be offered the option to also take out insurance to cover your monthly repayments should you be unable to work due to redundancy, sickness or accident. The umbrella term for the type of cover is Payment Protection Insurance – PPI for short. Or, in the case of a loan specifically, PLP – which means “personal loan protection”.
While PLP can provide the peace of mind that you will be able to service your monthly loan repayment should you be out of work, there has been a lot of controversy in the Press as to how this insurance is priced.
Many providers have been charging up to five times more than their cheaper, more ethical contemporaries – sometimes on a policy whose benefits are not as useful as those offered by the cheaper providers.
Many companies also pressurise consumers to take out their PLP product alongside their loan, implying that the cover is compulsory. In most cases it is not – you can find your own cover. Or even go without! (Though you should ensure that you do have some sort of provision in place in case the unthinkable does happen).
When getting insurance quotes, do thoroughly research the marketplace and compare premiums and benefits. Also, check out the small print to see whether you are actually eligible to take out PLP and what exclusions there are in case they may apply to you.
You are free to shop around for the right cover at a price that suits your budget. So don’t give in to bolshy salesmen and become a victim of a loan insurance rip-off!
In case you would like to find out how to claim PPI back – visit howtoclaimppiback.com.