Payment protection insurance or ppi is an insurance policy that covers the policyholder for credit card debt, loans, and mortgages in the event of illness, unemployment, disability or death. In essence, it is intended to provide security for its policyholders should they find themselves in any of the aforementioned undesirable situations.
To someone who is new to payment protection insurance, it seems like an ideal policy to acquire, as it offers debt coverage. However, for the millions of people who were mis-sold payment protection insurance, all they want is to be rid of this very controversial insurance policy and get their money back. PPI mis-selling is a very common occurrence, as it is typically sold by lenders alongside a credit card, loan, or mortgage. Many people who are in the process of taking out a loan, mortgage or applying for a credit card, find themselves being sold payment protection insurance without being properly informed about the terms of the policy.
The biggest problem with the process of selling payment protection insurance is misinformation, as majority of the policyholders were not informed about the terms and the exclusions of payment protection insurance.
What are the Exclusions of Payment Protection Insurance?
It is ironic that payment protection insurance is intended to offer coverage for existing debt in the event of illness, when it does not even offer coverage for people with pre-existing medical conditions. If you ever find yourself unable to work due to a stroke or a heart attack caused by a preexisting heart condition, you will not be offered coverage despite paying thousands of dollars on your premiums.
Payment protection insurance also does not offer coverage for civil servants and self-employed people. This would not be much of an issue if people belonging to the aforementioned categories are aware of this fact and if their lenders would take the time to tell them that they are not eligible. Instead, lenders sell to everyone while completely disregarding the nature of their employment. Lenders and insurance providers accept monthly premiums and even highly encourage single premiums while fully aware of the fact that the person paying for the policy is not even eligible.
Those who were unemployed during the time of application are also not eligible and yet they still manage to acquire payment protection insurance. After paying large sums on premiums, they are informed that they are not even eligible to make a claim. These exclusions are far too many and the fact that lenders and insurance providers don’t bother to explain such exclusions to consumers imply that they are merely taking advantage of the publics lack of knowledge.
How Long Does the Process of Reclaiming MIs-sold PPI take?
Reclaiming mis-sold PPI policies and attempting to get a refund for single premiums is a very long and tedious process. It involves running from one agency to another in an attempt to issue a legal complaint and it takes even longer for such complaints to be processed. In fact, you would be lucky if the lender or insurance provider who sold the policy to you would even bother processing your complaints.
In more cases than one, the government is left with the duty of processing such complaints despite the fact that the burden of responsibility lies in the seller. The Financial Ombudsman process thousands of complaints every year and since it can be very difficult to communicate with payment protection insurance providers, a lot of policyholders are left to wait years without any real progress.
The mis-selling of payment protection insurance has made it even more imperative to regulate the sale of such policies, which is precisely what the Competition Commission and the Financial Services Authority are trying to do. In practice, payment protection insurance offers very little or no security at all for the policyholder so it is better to look for other alternatives.