PPI Basics and Information about Payment Protection Insurance

Loan payment insurance or payment protection insurance is for everyone who is going to deal with taking loan sooner or later in order to satisfy your purchasing needs. It helps the borrower in their crucial situations like when they are sick, unemployed, or any other reason due to which they are unable to pay their monthly installments.

The payment protection insurance helps them by paying their monthly installments for few months on behalf of the borrower.

This way you can maintain your credit score and this can be the greatest advantage of taking this policy.

You just need to pay the premium on time and they will help you long away your policy is life. There are few things they will consider before making you eligible customer for this policy.

You should be of between the age group of 18 –65 and working when the policy is taken. You should be in the employment of more than 16 hours in a week permanently in a contract or self-employed for a specified period of time.

There are two types of payment protection policies are there. The first one is standard policy. This policy will not consider the age, gender, occupation or smoking habit of policyholder. Policyholder has to decide about how much loan amount policy they have to take. This type of policy is very common among the lenders. The policy will cover maximum 24 months and it will not pay for the first 60 initial days.

The other type of policy is age related policy. In this the policyholders’ age and the amount of loan (no matter if they are unsecured loans) is considered before giving the policy. This policy is for maximum period of 12 months only. Depending on the company you choose for the insurance it will also sometime covers death benefits. This is less expensive compared to other one as the youngsters are mostly covered in it the chances of defaults are less. But in either case you need to pay the premium in order to assure that policy will pay when he is unable to pay.

The policyholder has to generally put the claim before the company within 30 -90 days after 60 days of continuous unemployment. The coverage will depend on the policy taken. There are several cost also added to it, like the lender may charge some amount of processing fees for the loan. It will also depend on where you live, the policy you have taken and the amount it involves. Again if you have bad credit you have to end up paying more.

Payment protection policy is very expensive. Still if you think you need such type of policy then look for some discounts available from lenders on interest? Actual reason of keeping the policy costlier is that mostly the borrower chose this option after taking up the loan. So the lender can easily take advantage of the situation as the borrower having critical situation has to turn up for such kind of help in order to save his credit score or his asset, if any mortgaged.