What is PPI?
Payment protection insurance, or PPI, is insurance that will pay out a sum of money to help you cover your monthly repayments on mortgages, loans, credit/store cards or retail purchases if you are unable to work because of an accident, sickness, or become unemployed through no fault of your own. Our tables include PPI products to cover mortgages, loans and credit/storecards. We also have a comprehensive list of providers that offer PPI for retail purchases such as a sofa or dishwasher purchase. The tables also include stand alone PPI products where you don't have to have borrowed money from the company in order to take our their PPI product. If you take out a PPI policy with a company you are borrowing money from, the insurance will only cover the amount you have borrowed from this company, it will not cover other loans that you may have.
With a PPI policy, the insurance company will pay your monthly repayment (or a percentage of them) on your behalf for a fixed period of time if you become unable to work because of an accident, sickness, or become unemployed through no fault of your own. Sometimes the insurance company will make the payments to you, sometimes to the company you have borrowed money from. This type of insurance is sometimes known as ASU (accident, sickness and unemployment) insurance, Account Cover or Payment Cover.
Our tables also include Short-term income protection products. These policies protect your income rather than a specific borrowing but can be used in a simialr way to other PPI products. These products are listed on our tables alongside the more traditional PPI products.
PPI can give you cover against unexpected changes in your personal circumstances, but bear in mind its limitations and exclusions.
What do I need to know about PPI?
General features
- It only pays out for a set period of time, generally either 12 or 24 months, so think about what you would do if the claims payments stop and you are still unable to work. How would you meet your repayments?
- Check to see what you will and what you won't be covered for – for example, are there any exclusions relating to the nature of your employment or your medical history?
- Find out whether the policy is single or regular premium. If you buy a single premium policy you pay a lump sum up-front. This amount is usually added to the sum you borrow and attracts interest, so you'll be paying more over the long run.
- Check what refund you will receive if you cancel the policy or repay the loan early.
You have choices
- PPI is almost always optional – you should not normally be refused a loan or other borrowing if you decide not to buy it.
- Don't be pressurised into buying it – you don't usually have to take out PPI to get credit, and you don't have to buy it from the same place you are getting the credit from. There are 'standalone' providers that only sell PPI.
- Consider whether you are already covered by other insurance you have (for example through your employer),
- Consider whether other types of protection insurance may be more appropriate for your needs,
- Cancellation period (applies after July 2008) – when you take out PPI, you can cancel the policy and get a full refund of any money paid if you do so within 30 days of the date you sign the contract.
The advice and sales process
- Find out whether the provider is giving you advice. If not, think about whether you need advice. Getting advice means that the firm should recommend PPI or another policy that meets your needs.
- When you buy PPI, firms have to give you key policy information that sets out, amongst other things, the main features and benefits of the policy as well as any significant or unusual exclusions and how long the cover lasts.
- Make sure you read all the documents and ask the salesperson to explain anything you don't understand – especially the exclusions.
- Whether you get advice or not, the sales person must tell you about all the key features of the product including the significant exclusions and limitations if they discuss the product with you.
Insurance options
Different types of insurance differ in what is covered and what it is not covered (exclusions). It may be that PPI is not the right product for you, so consider if a different type of insurance might be more suitable for example Long-term Income Protection/ Permanent Health Insurance, although these do not automatically include unemployment cover.
For more information about PPI and other financial products, visit Money Advice Service.
Important information
The tables show payment protection policies that can cover credit card or mortgage borrowing, or borrowing with a secured or unsecured personal loan. Our tables include short-term income protection products. We also have a comprehensive list of providers that offer PPI for retail purchases such as a sofa or dishwasher purchase.
You can choose to buy payment protection insurance with or without taking advice.
You can buy payment protection insurance through a number of different routes. For details of ways to buy and how they are identified in the tables, see our section buying with or without advice. The term 'advisers' also includes advisers in banks and building societies that offer products provided by them or by another firm.
If you get advice, this means that someone will recommend a particular product or type of product to you.
Financial advisers
If you consult an adviser you will receive a keyfacts document describing their services and charges. This is an important document that you should read carefully to check what products the adviser is offering and how much they will charge.
We usually include any fees or commission charged by an adviser in the tables, so the rate you see is what you would actually get.
You can find more information on financial advice in our Getting financial advice section.