Payment Protection Insurance (PPI) was designed to be sold in association with all sorts of monetary borrowings, such as transactions involving credit cards, store cards, and secured or unsecured loans, to protect the borrowers. It will take care of your repayments for a preset period if you have lost your source of income as a result of redundancy, illness, or an accident, for instance.

Borrowers can rest easy, if they have appropriate Payment Protection Insurance, because then they have certain safeguards against adverse financial circumstances. However, there have been reports about PPI in the press recently because some loan companies and other financial institutions have been selling inappropriate PPI or adding it to finance contracts without the borrower realizing.

PPI can prove very beneficial to borrowers because of the peace of mind and financial security it gives. If you are off work for a time because of illness, an accident or redundancy and unable to meet your repayments, your insurance cover will meet them. So you need not be anxious about late payments or danger to your credit ranking.

You can always take out finance without Payment Protection Insurance. It is not obligatory, but certain lenders may attempt to convince you that cover is part of the deal. That is not right and you should make up your own mind about the advantages any PPI policy will give you.

Good quality Payment Protection Insurance offers considerable peace of mind and protection to borrowers, should adverse circumstances arise. PPI is always optional and many borrowers will require it, but PPI can be expensive. You are not compelled to take out PPI with your current lender, and you should make up your own mind about what sort of benefits you want from your PPI, and then shop around for the best deal as prices can vary considerably.

You should consider whether PPI is suitable for your particular needs. For example, paying for cover against missing repayments after losing your job may be inappropriate for certain types of people, such as the self-employed. Such people would simply be throwing their money away.

Some quotations from lenders will have an element for PPI already included as part of the loan or finance deal. Many people have been unaware that they have been charged for this cover. It is important to check your quotation thoroughly and establish whether or not PPI is part of the loan package.

This article is written by Jonathan L Walker, on behalf of Claims Management
UK, specialising in helping people with their Mis-Sold PPI