subject: Know All About Payment Protection Insurance Policies [print this page] According to one of the studies conducted, it has been found that approximately 20 million Payment Protection Insurance Policies have been sold by Mortgage Brokers, Building Societies, Banks, Finance Companies and Specialist Lenders all over the United Kingdom. Of these, more than 90% of the policies have been mis-sold. Mis-sold PPI claims submitted by people are being upheld and reimbursement is awarded against lenders of the United Kingdom.
You might have heard about PPI from your friends or colleagues. However, you have no idea what exactly the buzz is all about. Read on to have a fair idea about it. In simpler words, PPI refers to a policy offered by financial institutions or banks to cover the risk on failure to repay leaned amount. It acts as back up against the loan you have taken if you are stuck in an unexpected situation like loss of job, accident, illness or disability. This policy helps you in making timely repayment of loan irrespective of the unforeseen catastrophes that have affected your life. It sounds good, isnt it?
There are various clients circumstances as well as other factors that should be considered when insuring a customer for loan repayment. Enlisted are a few of these factors.
Explain terms and conditions fully to the client along with other necessary clauses.
Make sure that comparison of similar products is made.
Does the individual really require a safety cover?
Compare duration of the protection with the loan term.
Find out whether or not the individual had protection in past.
Sadly, majority of the PPI policies sold by lenders are a single premium policy. Now this means a huge amount of insurance premium has been placed on the loan, and thus escalating the total loan amount considerably. Going by what reports suggest, this rise in insurance premium can raise the loan amount up to 40 per cent.
For instance
A person borrows 25000 pounds at APR of 9% for 20 year tenure
Single PPI premium = 6, 890 pounds
Total amount borrowed - 25000 + 6890 = 31,890 @ APR of 9%
PPI protects the borrower for initial five years while paying APR of 9 percent for complete 20 year tenure. There exists no logic of arranging a short tenure loan like this on a loan for a longer term. There are many cases as far as mis-selling of PPI is considered and the number seems to be increasing each passing day. There is a long list that can be identified with the circumstances of a person. However, ensure that the product you have chosen is apt for the purpose.
You can apply for PPI claims if you are making payment of insurance premium inadvertently along with repayment of a loan. Although there have been cases where people have been mis-sold PPI along with credit cards or loan as an inducement to increase the possibility of securing a loan, this isnt the case always. There are various people who have been paying for PPI without even having any notion of doing the same. Motivated by courts, they have started claiming the payments for PPI.
by: ethanarcher
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