Fuzzy on the Concept of PPI? Here’s What You Need to Know
PPI, or Payment Protection Insurance, has been an interesting wrinkle in the European financial system over the past several years. We’ve seen it covered in newspapers and personal finance blogs. But for people who haven’t had to deal with PPI personally, it may remain an unfamiliar and foreign concept. So, if you don’t already know what PPI is, should you care at all?
The answer is, resoundingly, yes. Payment Protection Insurance is a worthwhile topic of discussion for two main reasons: 1) It’s legitimacy as a handy product, for people who take on major financial agreements, and 2) The illegal way it was sold to many people in the United Kingdom and elsewhere. We’ll cover both here.
First of all, PPI is a good product with a good purpose. When you take out a loan for a major purpose, like a new home or vehicle, you consider the risk involved with this decision. In most cases, you will have been approved for a loan that you can afford based on your normal income. If all goes well, you’ll continue making the money that you currently rely upon, and the loan will be repaid without incident.
But what happens if you lose your job? What happens if you get badly injured? What happens if your industry changes abruptly and you have to take a major pay cut? What if someone in your care becomes badly disabled? Worst case scenarios like these happen every day, and leave people in challenging circumstances where they may be unable to keep up their loan payments, potentially losing a home or an auto.
PPI protects against these eventualities. By maintaining a monthly premium, future loan payments are covered in the event that you are not able to keep paying them. People buy PPI all the time and are really happy with the peace of mind that it gives them. But PPI wasn’t always sold this way. Sometimes PPI was sold to people who didn’t want it.
This happened primarily in the complicated contract agreements that people signed when buying homes and property. PPI was buried deep within these agreements. The consumers who had signed up for the insurance only noticed it months or years later, spotting an unfamiliar payment on a bank statement, or seeing an ad for a PPI deadline on TV.
That deadline is the deadline for taking part in lawsuits, by which victims of PPI fraud can get their money back. These class action lawsuits now involved thousands of people in the UK, and millions of pounds have been restored. But now that this issue is entering its second decade, there is a deadline to take part. If you aren’t sure whether or not you have PPI, it’s important that you make absolutely sure. Check your bank accounts for unfamiliar payments. If you spot one and it turns out to be PPI, make sure that you follow up with a law group that has experience with PPI resolution. You can recover your money.