Continuing further from our previous article on PPI - more information, here are some common questions that can be listed as FAQ’s for PPI or Payment Protection Insurance.
What's in the small print?
Like all insurance, Payment Protection Insurance or PPI policies will generally include a number of exclusions or conditions that will prevent you from claiming on the policy. Make sure you understand which illnesses are not covered – see below. Also, you may not be eligible to take out a policy in the first place – say, if you:
-are under 18 or over 65;
-work less than 16 hours a week;
-are employed on a temporary or contract basis;
-are aware you may become unemployed;
-have an existing illness; or
-have stress or backache.
If in any doubt, ask the salesperson to explain any parts of the policy that you may not be able to claim on (the exclusions and eligibility conditions). Be sure you understand the exclusions before you buy the insurance.
I have an existing medical condition. Will I be able to take out PPI?
Yes, but you will not typically be able to make a claim for a medical condition you were aware – or should have been aware – existed at the time you took out the policy, or sometimes earlier. You would normally be able to claim for other illnesses that occur after you take out the policy. Make sure you read the exclusions to the policy.
Do I have to take out PPI and what would happen if I didn't?
No. 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.
Think about the cost of PPI and the amount that will be paid out if you make a claim on the policy. Check whether payments from a PPI policy would affect the benefits that could be paid from any other protection insurance that you already have.
If you don't take out PPI think about how you would pay the loan, mortgage or credit/store card payments if you were sick or had an accident and were unable to work or became unemployed.
Can I cancel the policy if I change my mind?
You can cancel the policy within either 14 or 30 days of taking it out, depending on the terms of the policy. But the firm can charge you for the time you were covered and the cost of selling the policy. Read the keyfacts Policy Summary, which explains the cancellation period.
If you have a single premium policy and you cancel after this initial cancellation period, you will usually find the refund you get is not in proportion to the remaining policy term. So you could get less back than you might expect.
Check with the salesperson or in the policy documents what refund you would get and how it would be calculated.
Will I still have to pay for PPI cover if I terminate a car loan?
On some occasions you may owe money for the PPI you bought to cover a loan, even if you repay the loan early. For example, this would apply if you take out a loan to pay for PPI at the same time as taking out a hire purchase (HP) agreement – or loan – to buy a car. If you terminate the HP agreement for the car early you may find you still owe money on the PPI.
I bought PPI with my loan or credit when I applied online, but I didn't ask for it – what should I do?Some firms offer PPI to customers when they apply for their loan or credit online – and this is sometimes selected by default on the forms. If you bought PPI in this way but didn't ask for it you should follow the complaints process below.
What should I do if I have a complaint?
If you have a complaint about the PPI you have been sold, you should first complain to the firm that sold you the policy, to give them a chance to put things right. If your complaint is about a claim, you should complain to the insurance company. If you're not happy with the outcome you may be able to take the complaint to the Financial Ombudsman Service For more information see A guide to Payment Protection Insurance on the Association of British Insurers' website.
