What is PPI or Payment Protection Insurance?

There are many different insurance being sold across Europe. Most of these insurance policies we don’t thoroughly understand. There are many clauses that we fail to comprehend and may in the future jeopardize your every right to claim benefit. We are no lawyers or don’t have any legal counsel at all times at our side during getting insurance but it is very important to read and understand every terms and condition as stipulated on your policy to know what are the covered losses.

Let us talk about PPI or Payment Protection Insurance. There have been controversies revolving around PPI. There are many misconceptions lying on this policy. It is better to understand what it really does to the policy holder. PPI or Payment Protection Insurance will cover your missed payment in the event of customer’s death, loss of job, disabled or any form of illness that will prevent the customer from earning, or any event that may hinder the customer from paying their debts. Debts like credit card payment, car loan, home loans and other kinds of loan. Now, if the customer fails to pay his/her debts due to above mentioned reasons, then the PPI will kick in. Your PPI policy will then pay your financial institution for your missed payment. Though you, as a policy holder have been paying premiums, the money will go the financial institution that you are indebted to.

PPI is usually offered by financial institution as an add-on. Just like getting a credit card. Your credit card company will then offer you a PPI insurance to cover your loan payment in the event that you are not eligible to do so. This will be a good way also for the financial institution to have as collateral of the possible unpaid loan. Interest rate is also involved in getting PPI. You may want to consider the best option for you.