The PPI insurance in itself is not bad but often it is sold under false pretences.
PPI is payment protection insurance. It is an insurance which many people are sold when they take out a loan.
It is usually called an ‘add on’. Banks or other lenders add it on the loan to protect the borrower from defaulting on the loan. In other words, should the person borrowing the money get sick, have an accident or die and could not repay the loan, the bank would be covered and get their money.
The PPI insurance in itself is not bad but often it is sold under false pretences. People are paying extra money for something they do not need. They may not understand what they are getting when they purchase the insurance plan and end up paying a premium that is unnecessary. It is estimated that 20 million people in the UK took out PPI.
If you think that you were misled and purchased insurance that was not necessary there may be a way to reclaim it.
1. The first step is to take a good look at your PPI policy. It is still possible to file a mis-selling claim although people do not realize it. Even if you cannot file a claim, you may be able to cancel the insurance and find a cheaper option if you still need it. If you are having trouble finding your loan papers, call your lender and see if they have a copy. There may be a fee so be prepared to send in a check for the agreed amount. If your account is close, it may not be possible to do this but they can provide a break down of the amount you have paid in the past.
2. When you bought the ppi policy it was important that the lender asked you certain questions. Sometimes the bank will tell you that is was necessary to buy the policy for the PPI from the same company that the loan is from. That is not true. If you were told that and bought it under those pretences then you may have a claim for mis-selling. Often people believed that it covered both partners should anything happened. That also is not true. There are many reasons so check the ppi mis- selling check list here.
3. If you want to reclaim the money spent for this ppi and do not think it is useful, be sure you want to continue this process because your insurance will likely be cancelled. You will have no coverage should you get sick or out of work.
4. If you are not successful after talking to the bank and contacting the insurance company, you may want to take one more step. You will need to contact the Financial Ombudsman service. They will be able to help you with the next steps to be taken. They will decide if you are entitled to file a claim and you were mis-sold insurance. They are fair and deal with this all the time.
No one wants to be taken advantage of and pay money for something that is not necessary. If you feel that this is the case, by all means look into the situation. It is the prudent thing to do. Ppi insurance is good in the right situation but it should only be sold with full disclosure of the information you needed to know to make an informed decision.