The insurance category known as Payment Protection Insurance is something most of us have bought at some time during our lives. You are probably included if you have ever gotten a loan from a bank or finance company or even on a line of credit. PPI is sold under many names. Repayment Insurance is one of the aliases it goes under. As part of your monthly payment on your credit card You may also be paying for Credit Protection Insurance, usually referred to as CPI, a similar but somewhat different product.

Payment Protection Insurance, which is what this product is called when sold by banks and finance companies, or Credit Protection Insurance when it is sold by credit card companies, are supposed to make your payments for you if you become unable to make your payments due to such things as job loss, injury or sickness. The payments part of your monthly payments.

The first issue is that Payment Protection Insurance is almost never 100 percent. The general rule is that the insurer only agrees to make the payments for a year. If your injury or illness in permanent, you are still saddled with the remainder of the loan. That is right: your payment protection insurance will leave stuck at the point where you need it the most. And if you get fired rather than laid off, the insurer will probably deny your claim for so much as a single payment.

The problems with the way PPI coverage is sold start with the practice of allowing the policies to be sold by untrained agents; namely, loans and mortgage officers and agents, credit card purveyors and finance companies. These individuals, it was revealed when the regulatory agency charge with monitoring the United States insurance industry noticed that the rejection rate for claims for PPI benefits were being rejected at an alarming rate, were frequently guilty of intentionally misrepresenting PPI and CPI requirements and benefits.

It is not difficult to understand why these products were easy to sell with little questions from consumers. When you apply for a loan or a credit card or a line of credit or overdraft protection, you do not go into the deal thinking you are buying an insurance policy.

Now, there is nothing nefarious in this if it were not for the fact that in more than a few cases the insurance commission is worth more than the money the lender will make on the debt servicing charges, interest included, for the loan itself.

When a substantial portion of the return on a loan is realized by getting the consumer to agree to also purchase an insurance policy, the lending party is acting primarily as an insurance agent, not as a financier.

When we say mandatory, we get to the hub of the matter. When sellers are not sliding the PPI purchase agreement into the pile of documents you must initial when finalizing your credit transaction, they are often telling people they have to buy it or the loan will not be approved.

Simply sliding the contract by the consumer is not the only strategy used. A particularly objectionable tactic is misinforming the consumer that PPI purchase is required in order for the loan to be made.

Learn more about PPI Claims. Visit www.PPIClaimsUK.co.uk where you can find out all about how to make PPI compensation claims and start to get your cash back.

categories: personal finance, credit cards, loans, ppi claims, ppi claim, ppi compensation, mis-sold ppi, mis sold ppi