With stories about mis sold payment protection insurance never far away, it is understandable why people are somewhat distrustful of protection products. But independent financial research company, Defaqto, are calling for a line to be drawn under the whole PPI mis selling saga to eliminate the negativity around protection insurance and help restore consumer confidence.
Defaqto, who specialise in rating, comparing and analysing financial products including general insurance products, are concerned that in light of the payment protection insurance mis selling customers are put off ‘similar’ products and are therefore potentially leaving them exposed and vulnerable in this unsettled economic climate.
The scandal surrounding payment protection insurance is around the manner in which it was sold and not the product itself. Like every kind of insurance, PPI can be a very useful, and helpful, policy to have. It protects you should you are unable to work – either due to redundancy, illness or an accident – and are struggling to, or cannot, meet your monthly loan or credit card repayments.
The nationwide controversy surrounding payment protection insurance has arisen because many PPI policies have been mis sold, with many customers completely unaware that they even have, and more importantly, are paying for PPI.
There is an increasing number of short term income protection products on the market. In fact, the amount of products available has almost doubled over the last two years, from 20 in 2009 to 39 at present.
Short term income protection policies tend to be more flexible than PPI products and protect all expenses rather than just loan and credit card payments.
Analyst for Life and Protection at Defaqto, Ben Heffer says:
“Despite the well documented problems will the selling of PPI, it is important for people not to be turned off protection insurance as a whole – and, critically, a line needs to be drawn under PPI to restore consumer confidence in protection products.
“It is important for people to have appropriate protection in place for their needs and circumstances. People need to ask themselves how they and their dependents would cope financially if for example they lost their job or fell ill.”¹
Source ¹IFA Online (Aug 2011)
Content correct at time of publication