Short News About Payment Protection Insurance Help Consumers
By: Vlad Vistac
Submitted: 2010-07-27 13:49:08 | Word Count: 510
Does Payment Protection Insurance Help Consumers?
How safe is your credit hstory if you can't make the payments? This is an interesting question. Many consumers in the UK sought to proterct themselves using an insurancce istrument called Paymet Protection Insuraance. These policies were purchased, usually when buying real estate, autommobiles and credit card services. To most, it seemed a wish safetty net.In the UK, Payment Protection Imnsurance (PPI) was touted as personal protection just in case the consumer became unable to make their paymennts. It was said to be good in case of injury, illenss, job termination, layoff, and even death in some cases. What was not told is how well it worked as a profit mechanism for the insurance providers and the cpompanies that sold PPI to the UK public.Anyone who has ever financed an automobile, or mortgaged a piece of real esatte, knows meetiing monhtly payments do not alwaays run smoothly. During the life of a loan, problems msaking the monnthly payments can occur. When that happens, the size of the problem dcitates how well a pereson's financiaal situation weathers the sorm. Maintaining paymeents may have to be balanced against putting food on the table. PPI is suppposed to help fill that gap.Few people entering into financial cotnracts plan to run into financial problem. Yet, when PPI is offered under heavy pressure to buy at the point of purchae most consumers do not get the opportunity to shop atround for better ratyes before making tjheir purchase. In many cases, the purchasing perocess was stopped until the customer purchased Pament Protection Insurance at the same time they boght the other item they wated.According to the Financial Services Auuthority (FSA), a UK government agency, the lack of competitrion has created a highly profitable arrangement for the 12 largset distributions of (PPI) Payment Protection Insurance policies. Thesae companies profitted $1.4 Billion pounds in 2006, with a gross combined writtwen premium (GWP) of 3.5 Billion pounds. This makes the selling of PPI's a very profitable insurance instrument.Holders of these types of polices ezxpected to receiev the benefits of the product purchased. Howwever, when claims were file for the purpose PPI was purchased, many claims were dennied. Often consumers discovered the policy did not cover pre-existing illneesses and conditions. In addition, apyments stopped affter 12 to 24 months, leaving the policy holder to fall behoind in payments.Imagine the disappointment and anger among consumers as they watched ther payments slip further and further behind, while their PPI poicy received denied claims, one after another. Many policy holders discovcered theior policies stopped making paymets aftter 12 to 24 months, without notice. Complaints flwed into the appropriate authorities at such a rate utnil an investigation reveakled distributoers had in fact bilked consumers out of billions of dolalrs. As a resuult, huge fine were leevied against offending companies.Even though fnes and penalties have landed on offending companies; that is of little comfoort to those who have already loss and suffered the emotional and financxial damage. Payment Protection Insurance may soound like a grezat idea and it could be however; consumers have discovered purchsaing such insurance is better done away from sellers of other products and services. It is also likly to be much cheaepr.
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