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Whether it's an unexpected illness or job loss, there are a number of reasons why you may have a hard time paying off a debt. Payment Protection Insurance (PPI) is designed to mitigate this risk.
Here we will explain PPI and help you to know when it is advisable to acquire one. Keep reading!
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View articleWhat is the payment protection plan (PPI) all about?
Payment Protection Insurance, or PPI, is a policy designed to help consumers pay off their debts over a fixed, short-term period. It provides coverage for accidents and sickness, which is why it is often called accident, sickness, and unemployment insurance. Terms and conditions vary, but most PPIs help policyholders meet monthly repayments for specific loans over a fixed time.
In the past, PPI was sold as part of a bundle of financial products such as credit cards, mortgages, loans, and auto financing. The entire premium was often added to the total loan amount and paid by the borrower over the loan life with interest. These single-premium policies were banned in 2009, so monthly premiums are now paid.
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View articleWhat coverage does a payment protection plan have?
Payment protection insurance is usually contracted in parallel to the contracting of mortgage and personal loans, covering the amount of money requested from the bank.
Payment protection can help keep your account healthy during unexpected life events. Many types of events are usually covered, although the coverage periods may be different (for example, disability coverage is usually longer than moving coverage). Your bank or credit card company may have specific guidelines about what information or proof you must provide to use this type of protection.
Here are some of the life events that may allow your payment protection plan to kick in:
- Unexpected unemployment causing reduced income
- A hospital stay of one or more nights
- Divorce
- The birth or adoption of a child
- The death of a family member
- Moving to a new residence
- Retirement
- Disability that prevents the covered person from working
Here are some examples of the conditions you must meet to be covered by your disability payment protection plan:
- You will need to be under the care of a physician for an accident or injury that renders you unable to work in any job for which you are qualified, not just the one you normally work.
- You will need to have been working for several months at the time you enroll in the payment protection plan.
- Your disability must have lasted more than 30 consecutive days for payment protection to kick in.
If you qualify for the coverage you have paid for, it will only last for a limited time, say 12 months, even if your disability lasts beyond that period, and it will cover a limited amount of money specified in the agreement.
When is it advisable to take out payment protection insurance?
Payment protection insurance may be a good idea for consumers who don't already have loan protection insurance or critical illness coverage. However, some factors must be taken into account. The first is that the PPI is very specific in its coverage. It will only cover a debt, it can be a mortgage, a loan or the return of the credit card.
Undoubtedly, the payment protection plan is especially indicated for those people with unstable jobs or who suffer from a chronic or degenerative disease that could lead to periods of sick leave due to temporary disability. However, anyone can benefit from it, as it is a good way to cover the payment of our mortgage or any other credit and thus have a respite from debts in the event of any of the qualifying events.
This plan is a great option that we should take into account when taking out a mortgage or applying for a loan. In addition, you do not necessarily have to contract it with the bank that grants you the mortgage or credit. Compare what best suits you and get the best payment protection insurance. If this is the case, do not hesitate to contact us for more information about our payment protection plans.
Feel safe with our payment protection plans.
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The contents in this section are provided for informational and educational purposes only and do not apply to all types of situations. The contents should not be construed as any type of advice or suggestion to take (or refrain from taking) any particular action, as it does not include or take into account all factors that may be relevant to your individual needs.