Payment Protection Insurance (PPI), sometimes called Accident, Sickness and Unemployment (ASU) insurance, is designed to replace your income and pay off debts in the event that you are unable to work. A policy claim will usually pay you a wage of around 65% of your gross salary if you are unable to work as a result of accidental injury, sickness or unemployment.
When you take out a loan, mortgage, credit card or some other credit agreement a PPI policy will often be offered to you by the lender; sometimes they are included automatically in the package. Be mindful of this, however – over recent years there has been a great deal of controversy concerning PPIs since they are frequently over-priced and irresponsibly sold by companies who often target more vulnerable borrowers with hard-sell tactics. However, they are not compulsory, so you should check the small print as to whether a PPI policy is included in a quote before signing up to a credit agreement.
Despite this, Payment Protection Insurance can, in some cases, prove to be a prudent method of protecting yourself and your family financially. If, for instance you are self-employed, in a job with a medium/high risk of injury and have financial obligations such as mortgage or loan repayments it may well be a wise choice to opt for such a policy, since state incapacity benefit may not cover your needs sufficiently should you suffer a serious injury.
For a decent, good value policy though it is recommended that you find a reputable insurance provider offering PPI as a stand-alone product. These policies are usually much better value than those offered alongside credit agreements since they tend to have better terms and can be tailored to suit your individual situation. Premiums and payouts generally depend upon the policy holder’s occupation/salary and how quickly you want cover to kick in.
