Protection insurance explained Payment protection insurance (PPI)

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Banks have put aside over £9bn to compensate consumers who were mis-sold payment protection insurance (PPI)

What is payment protection insurance (PPI)?

PPI was designed to cover your debt repayments if you were unable to work, either through illness, accident or redundancy. However, many PPI policies were mis-sold to people who would never be eligible to put in a successful claim. Many people didn't even know that PPI had been added to their loan, mortgage or credit card.

How do I know if I've got PPI?

If you're not sure if you have PPI, look at the paperwork sent to you at the time you took out your loan, credit card, mortgage or finance agreement. It may also be itemised on your annual statements, although it might be listed as 'loan protection cover' or 'card protection cover', rather than payment protection insurance.

If you're still not sure, contact your lender or finance provider and ask whether you have PPI.

How do I complain about mis-sold PPI?

We've developed a free online tool to help you complain about your PPI policy if you feel you were mis-sold. There's no need to use a claims management company (CMC), which offer to handle your PPI complaint in exchange for a fee. 

Most CMCs will charge you a percentage of your final PPI settlement as a fee, often as much as 30% of the value of your settlement. Some CMCs will even ask you for an up front fee.

What are the alternatives to PPI?

PPI only covers one item – the debt it's attached to. Most people would do better to consider a protection policy that covers their income and essential outgoings. We believe that income protection is the best alternative for most people of working age.

Looking to buy life insurance?

If you decide you need advice, make sure you consult an independent life insurance broker.

Which? Financial Services can refer you to an impartial, no-obligation third-party advice service to provide you with the best life insurance or mortgage insurance policy tailored to your individual needs. 

Find out more about the life insurance referral service at Which? Financial Services.

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