Payment Protection Insurance (PPI) is offered by banks and credit providers as an add-on to a loan or overdraft product. It is often used to insure car loans, loans given out by finance companies, and home mortgage loans.
Many people aren’t aware that this type of insurance exists nor do they understand what it’s all about if they do have it.
That’s why we want to take a moment to give you the information that you need to make an informed decision about PPI to see if it’s something you want to offer to your borrowers.
What is Payment Protection Insurance?
PPI, also known as credit insurance, credit protection insurance, and loan repayment insurance exists to protect the consumer.
If the borrower was to suddenly become ill, disabled, deceased or otherwise incapable of paying the loan, this form of insurance guarantees repayment of the loan.
It keeps you from being out money, property or both on the off chance a borrower cannot make good on his or her payments.
What Types of PPI Exist
There are a number of different types of PPI that exist. For example, credit card companies may have their own type of Payment Protection Insurance.
They typically will have their own name for it but it will be a form of credit protection. It is offered as an a la carte service and often is highly recommended on certain types of loans.
Specific Categories of Risk
PPI can also protect against specific categories of risk. Here are a few:
- Credit Life Insurance
- Credit Disability Insurance
- Credit Accident Insurance
The different categories of risk cover the different reasons why a person may not be able to pay their loan without assistance. It could be that they have passed away or their family member who borrowed money has passed away.
That’s where Credit Life Insurance would be claimed. It may be that the borrower has become disabled and therefore is subjected to a limited income or may have experienced lost wages. That’s where Credit Disability Insurance comes in.
How PPI Is Claimed
The process for making a PPI claim is as follows:
- A person has signed up for credit insurance.
- He or she meets eligibility requirements as stated by the policy.
- They contact the lender for the next steps to take.
- They wait for the PPI to kick in.
The length of time that it takes for PPI payments to clear will be addressed in the next section. There are different factors that can contribute to the delay of PPI payments.
How Long It Takes for Payments to Clear
Once a PPI claim has been made, it can take anywhere from 8 to 12 weeks for payments to clear.
This gives the lender a clearer timeframe as to when they will receive compensation for the PPI claim in question. Two to three months is the average but it can occasionally take less or more time depending on the conditions in which it was written and filed.
Delays and What Causes Them to Happen
Some of the factors that can delay PPI claims for mis sold PPI include:
- The Number of Borrowers Requesting One
- Improper Filing
- Missing Documentation
People may or may not have had experience filling out claims before and may omit important information that will help them receive their PPI Reclaim payments in an efficient manner.
Banks and financial institutions are often swamped by the number of requests that they receive. It can be some time before they look at paperwork even when it’s filled out properly.
Now that you know what a PPI claim entails, you have better working knowledge of what will happen next.
You also know what type of timeframe exists for fulfilling PPI claims. This gives you an estimate on when things should be done and gives you the peace of mind that everything was done correctly without further delaying the claim and making a successful request for a PPI Refund.
Who is Not a Good Candidate for PPI
Some people are frankly not good candidates for PPI. These individuals may or may not heavy steady employment for the long haul.
Business owner and independent contractors fall under this category because their business fluctuates. Unlike large companies, there is very little wiggle room.
Small business owners may be faced with lean times on a routine basis throughout the year. They may opt not to carry other forms of insurance like health insurance because they can’t afford to pay for.
These individuals are not good candidates for Payment Protection Insurance. There is a very good chance they will be told that when applying for credit insurance.
Unemployed people and people with previous medical conditions may not be eligible for PPI coverage. That’s why it’s incredibly important to review the terms and conditions of a policy.
Anyone making PPI claims will need to know if their unique circumstances will be considered by the lender. If a definitive answer cannot be given, it may be best to opt out of PPI coverage. There is no sense in filing a claim if a man or woman is going to be turned down for ineligibility.
PPI claims are prevalent because of the financial turbulence experienced by today’s economic and job market.
Many people are aware that circumstances can change in an instant and that’s why they opt to pay for additional coverage in that off chance that things go awry and they’re unable to make their scheduled payments on time.
PPI provides peace of mind for those who are uncertain about their future.
There are distinctive advantages to have Payment Protection Insurance on loans. Not only does it protect the lender from loss, it also gives people certainty in a shaky environment.
The last thing a person wants to do is lose the home or car they worked so hard to obtain and pay for. When things go awry as they sometimes do, the borrower knows that it will be alright. They know that it will only be a matter of time before their lives return to normalcy once again.