Banks brought out Payment Protection Insurance to cover a consumer's repayments in the event they lost the ability. However recently, it has been publicised that banks and lenders are exploiting the product through questionable loopholes. It has been sold to people who are uninformed, have not been quoted the cost or want it but don't know they are ineligible. Most banks cunningly tag on PPI to any loan or credit and bank are pressured with bonus incentives to sell as much as possible.
Theoretically, PPI is a great item for consumers, particularly in view of the rising rate of unemployment in the UK where people are being made redundant regularly. Ideally, a short spell of unemployment shouldn't hamper your ability to repay a mortgage, but the reality is quite the opposite; lenders will avoid paying out at all costs, often claiming that an individual is not able to take advantage of the system based on some technicality.
The biggest con of all is the fact that you will most likely not be able to ever use the insurance in the event of an emergency, for example; if you are over 65, even if you are still employed, you could not claim PPI because you would be above the age of retirement. If you have a previously documented medical condition, no matter how small, you will be considered a high risk customer and as you are more likely to be off work on medical grounds, you would not be eligible for the insurance. If you are self employed, you are considered a higher financial risk customer someone employed full time, so you will not be entitled to PPI. But in any of these circumstances, banks will have no problem adding it on to a service with no intention of paying out if it is needed.
The PPI can take up a significant portion of your repayments, to put it in perspective, if your PPI was 30% of your monthly repayments and for 10 years you had been paying a 250,000/25 year mortgage, with interest this could add up to over 3000 to which you are entitled to reclaim.
The have been thousands of cases of banks mis-selling PPI just like this and if you are one of them, you are legally entitled to a full refund. You may need to be persistent with the banks and this can take time so it is sometimes easier to enlist a legal professional to do it for you. Doing this can save you all the legwork and give your claim much more authority, most agencies work on a no-win-no-fee basis so you will not be out of pocket. After a watchdog ruling in 2009 lenders are now required to correctly sell PPI to customers ensuring they are not overpriced, customers can chose to opt out at any time and they are fully covered.
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