People who take loans or mortgage something valuable, they should go for a Payment Protection Insurance. This is a loan insurance specially designed to protect your mortgage, credit card and loan payments, and to avoid loss due to unanticipated events like unemployment, accident, prolonged illness or death. Many financial companies have now started giving out these insurances. Moreover, these are custom made and specially tailored to meet different requirements of different customers. These policies are usually sold when you avail a credit card service, loan or mortgage. It is highly recommended by financial experts to take ppi especially in case of a Secured Loan. Reason being that in a secured loan, a borrower or loan taker puts or mortgages his or her home as a security, and god forgiven if he or she defaults on the loan payments and is not able to pay it back due to any reasons, he or she may loose the ownership and possession of the house. This insurance is also known as Life Accident, Sickness and Unemployment cover (Life &ASU), Mortgage Payment protection insurance (MPPI), Accident, Sickness and Unemployment (ASU), Personal Loan Protection (PLP), and Credit Card Repayment Protection (CCRP). Secured Loans are risky for your house, and ppi reduce the risk to a great extent. It makes provision for your loan repayments if you are not able to. In such cases these insurance are creditable and laudable financial planning strategy, as they are a protection cover for your installments on your secured loans. Under this insurance, the borrower makes a payment of a certain amount along with the loan installments to the lender every month or as decided and these ppi installments will be used to repay the outstanding loan amount, in case you fail to do the same. In addition, mostly you even get back the whole amount at the end of the loan tenure as
ppi refunds. However, these are not mandatory but they are advisable and highly beneficial for those who need protection, and are unable to work due to medical or on any other grounds.
However, these are not beneficial for everyone. They can be utterly useless for many customers. Ppi sold by many lenders in addition with loans, mortgages and credit cards deals are extremely expensive and not worthy as compared to 'stand alone' policies. But these policies are a very important source of profits for these lenders and so they try to sell these policies to anyone and everyone and at any given chance. There is one more hitch with Payment protection insurance. These are riddled with exceptions and exemptions, terms and conditions and clauses. These include the most common and valid reasons for absence from work like stress, depression, back problems, etc. Moreover self-employed, people working on short term contracts basis and agency work are not fully covered under these insurance and as a result one in four claims are rejected due to these exclusions and terms and conditions.
