Credit Card Payment Protection Insurance (PPI)
PPI has been designed to help you cover your card repayments if you fall sick or become unemployed. As with all types of insurance you should consider all of the details before signing on the dotted line.
More from Credit Fraud and Protecting Your Credit Cards
7 January 2009
Credit Card Payment Protection Insurance (PPI)
Credit card Payment Protection Insurance policies make card repayments for you if you have an accident, lose your job or get sick.”
Protect your card repayments
Payment Protection Insurance (PPI) is different to the policies that safeguard your cards and enable you to make a call to one number if your cards are stolen.
PPI policies make card repayments for you should you have an accident, lose your job or get sick. PPI will meet your minimum monthly repayments and some pay more. This usually extends up to one year.
PPI usually costs around 70 - 80 pence per £100 of the outstanding balance on the card. If your balance is large this can add up.
If you pay your bill off every month it would be prudent to check whether taking out PPI might be an unnecessary expense.
Card usage during the claim period is not covered as protection policies make their payments based on the amount owed at the time the claim is made.
Do You Need PPI?
As with all insurance policies you must look at whether paying for PPI is necessary. Consider how you would manage if your income was reduced or stopped.
For instance, were you to get sick or lose your job but could still cover your credit card repayments from another source, it may be worth saving the insurance payments.
Alternatively, if your income was interrupted and you were left with no means to pay, this type of policy could be for you.
You do not have to take out PPI
If you don’t cover your cards you won’t be refused credit for not doing so. Don’t be pressured into buying it if you don’t want it. Also, don’t forget there are different providers on the market, so shop around.
Look at the market
You can buy PPI from providers, direct from brokers and on the Internet.
... and the details of the policy
Check to see if you can only claim once, or whether the insurer would pay out again if you lost your job or became ill more than once.
PPI will not cover:
A medical condition you already know about.
every type of illness.
unemployment if you resign, accept voluntary redundancy or become unemployed due to something that you did to breach your employment contract.
How can I pay for PPI?
Pay for PPI with regular monthly premiums or with one single payment. Don’t forget that if you take the policy out and change your mind within 14 days you can do so without any charge, as this is deemed to be your ‘cooling off’ period.
