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Do I need Life Insurance?


Please note that the information provided here is of a general nature only and for more detailed advice on what you are covered for - you must refer to your policy or to your insurance company.

Payment Protection Insurance (PPI)

Payment protection insurance, or PPI, is insurance that will cover monthly repayments on mortgages, loans, credit/store cards or catalogue payments if you have an accident or sickness and are unable to work, or you become unemployed.

This means that the insurance company will pay the monthly repayments (or a percentage of them) on your behalf for a fixed period of time if you become unable to work. It is sometimes known as ASU (accident, sickness and unemployment) insurance.

PPI can provide worthwhile cover against unexpected changes in your personal circumstances, but bear in mind its limitations and exclusions. PPI only pays out for a set period of time, generally either 12 or 24 months - although you may be able to make further claims later. You may not be able to make a claim for an illness you already have or have had before. And stress or back complaints, and possibly other conditions may not be covered, even if you can't work because of them.

What does PPI cover?
What the insurance covers will vary depending on the sort of repayments the policy is designed to protect, and on the terms of the particular policy. The following benefits are typical for different types of PPI cover:

The insurance covers your monthly mortgage repayments for a set period of time. The maximum number of monthly repayments that the insurance company will make is usually 12, but it can sometimes be 24.
This means that after this period you will have to pay your monthly mortgage repayments yourself. You can usually make further claims later on but there must be a gap between them.

Credit and store cards
The insurance will generally pay off a percentage of your outstanding balance or the minimum payment each month for up to a year. Check which option is being offered. This means that you may still have to pay any balance left after this time. As with mortgages, you may be able to claim again on the policy after a certain period.

The insurance will cover your monthly repayments for the loan - generally for 12 or 24 months. After this period you will have to pay your monthly loan repayments yourself. As with mortgages, you may be able to claim again on the policy after a certain period.

If the insurance for any of these products contains life insurance, then the cover will generally pay off the balance of the debt covered if you die. If the claim is for disability, the monthly repayments may be paid to the end of the life of the loan.

Note: You do not need PPI to take out a loan.. If the firm insists on PPI cover to get the loan, you should consider whether you really want to take the loan with that lender.




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