A Guide To Loan Insurance

Many customers fall into the trap of financial services companies that ask them to borrow money for insurance. These customers end up paying £1,000s more for loan insurance simply because they are not aware of all the costs when they sign up for Payment Protection Insurance (PPI). Before you apply for PPI, you should research well. This can help you save up to 90% on the cost of the loan insurance.

Many consumers apply for PPI because of the financial security it provides. In most cases, your loan premiums will be paid in the event that you are sick, lose employment or are unable to work due to an accident. You will only have to pay a monthly premium for the PPI and the insurer will pay your insurance premiums for a year.

Before you sign up for PPI, find out if you really need it. If there is a way you can pay your insurance premiums without taking a loan, then you are better off without PPI. Some lenders will automatically sing you up for PPI unless you specifically indicate that you do not require it. While PPI is usually offered at low interest rates, its true cost really lies in the insurance cost.

Tips On Getting Cheap PPI
To get a cheap PPI, sign up for a policy that is sold standalone. A number of companies offer these policies, which cost lower than the lenders’ PPI. If you apply for PPI from these companies, check that you are not buying multiple covers. Ensure the PPI box is unchecked when you will be purchasing insurance from your lender.

There are two things you should consider when you want to sign up for PPI; type of cover and excess period.

Type of Cover: Your PPI can cover you against terminal illness, unemployment, sickness, accidents or death. The more the number of covers you want, the more expensive your PPI will be.
Excess Period: Go for PPI that will back date the benefit so that you will be paid “back to date” instead of after 30 or 60 days.

There are many PPI providers and you can get cheap PPI simply by comparing quotes. However, before you sign up for any PPI, read the terms and conditions of the providers and make sure they are suitable for you.

Is Your Job Under Threat?
PPI offers protection in the event that you lose your job. However, if there is a likelihood of redundancy in your employment and you take PPI, the employment cover will be invalid.

Check whether your job is under threat before you sign up for PPI. The general economy trends in your industry can help you determine the extent of likelihood of redundancy. Unfortunately, there are many variables that affect the likelihood of redundancy and some insurers may disqualify your cover arguing that redundancy was expected in your industry.

If you already have an expensive PPI, find out whether your lender can allow you to cancel it. This is becoming increasingly common and savvy consumers are switching buying PPI from insurance companies to standalone providers.

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