What is payment protection insurance (PPI)?

Due to numerous economic factors, the modern generation is now facing challenging financial issues. These factors are more uncontrollable and include more increasing costs of daily expenses, interest rates, and market rates than ever before. In this regard, an innovative solution, PPI or Payment Protection Insurance has rescued a big number of individuals who have overdrafts or debts.

What is PPI or Payment Protection Insurance?

Also known as loan payment protection, Payment Protection Insurance (PPI) is a kind of insurance policy that is intended to help borrowers in paying their loans in the event that they are not able to do so. This insurance policy takes care of the payments for a loan or credit card bills should the borrower becomes ill, unemployed, disabled, or dies.

Payment Protection Insurance (PPI) is a form of insurance that covers the minimum payables for a specific period of time until the borrower is able to earn money and make the payments. Usually, the policy pays the loan for 3 months, 12 months, and 2 years the most. This is especially helpful for those who want to keep a good credit standing or a positive credit rating.

Typically, this type of insurance policy comes in a form of a finance add-on. Sometimes, it acts as a stand-alone PPI policy provided by the insurance company. Either way, it covers the borrower from any instances like death, unemployment, disability and accidents that prevent them from paying a debt.

Most often than not, PPI is included in various loans, credit cards, and mortgages. One greatest benefit that PPI provides is the peace of mind amongst many borrowers who are uncertain about their repayment capabilities. There are numerous insurance providers who accommodate borrowers on a stand-alone basis, of which is more cheaper compared to the covered credit offered by various lenders and banks.

Factually, PPI’s terms and conditions can also be customised according to one’s specific needs and requirements. For a few savings, the borrower can opt for PPI coverage for sickness and accident only, without getting the unemployment protection facility. It is also recommended to check with the employer before purchasing the Payment Protection Insurance as some companies continue to pay for injured or sick employees for a specific period of time. This saves the consumer from paying extra money for an unrequired coverage.

In making PPI claims for all cases, one needs to validate the claim by providing proper documentation. It is also important to discuss different scenarios with the PPI provider to prepare for future coverage.