Here’s How Payment Protection Insurance (PPI) Can Help You Avoid Serious Debt
If you’re thinking about getting a loan but want to protect yourself in case you lose your job, you’re likely wondering where to go for help.
Even if you’re confident that you won’t lose your job, nobody can predict the future. What if you get sick and are unable to work? What if you’re get laid of?
Missing payments can destroy your credit score. Credit card companies don’t care whether or not you can afford to pay. They aren’t worried about your wellbeing. They just want you to pay your loan’s monthly minimum–or else.
Failing to pay your loan or credit card won’t just hurt your credit score; it can also force you rack up expensive late fees.
Most people who find themselves in this dire situation are at a total loss. However, payment protection insurance can give you an added layer of financial safety.
What is Payment Protection Insurance?
Payment protection insurance (PPI) helps cushion your finances. When you take out a loan or use a credit card, payment protection insurance offers protection if you lose your job or can no longer work.
The amount of compensation you can get will depend on the PPI policy you buy, as well as several other factors.
Why Do People Need Payment Protection Insurance?
Although some people choose to opt out of payment protection insurance because they feel they don’t need it, everyone can benefit from its coverage. Losing your job or being unable to work will come with enough problems, and you won’t want to risk falling behind on your monthly bills.
When the unexpected happens, payment protection insurance steps in and gives you peace of mind. You might not ever file a claim, but you know you have a backup plan if you need it. A PPI policy could prevent you from losing your home or car when times get tough.
What Payment Protection Insurance Covers
You will want to learn what your specific PPI covers before signing a contract or making your first payment. The events that your policy will cover depend on your insurance company and the type of coverage you buy. Most policies will have your back if the company you work for decides to end your employment. If you get sick and your injuries stop you from working, most policies will cover your loan or credit card payments until you heal.
Some insurance companies will pay your debt if you die, so your family won’t need to take over your payments. If you have any questions about what your policy will cover, don’t be afraid to ask.
What Isn’t Covered
You will also want to understand what PPI doesn’t cover. Some people buy a plan without taking this into account and are disappointed. You can’t expect your plan to cover your payments if you voluntarily quit your job.
Some policies limit the types of injuries and disabilities for which you can seek compensation. Your insurance company might require you to be a policyholder for a certain number of months before you can file claims. You will need to look at your agreement to know how long it will take for your coverage to take effect.
Are You Eligible?
PPI eligibility requirements vary depending on how you buy your policy. But, in most situations, people who can take out loans or get approved for a credit card can buy payment protection insurance to safeguard their financial stability.
The only exception is that those who don’t currently have a source of income are not able to apply. You need to prove that you have a job or are self-employed. Employees can use their paychecks to show proof of income, and business owners can use their tax returns.
Finding the Right Policy
Even though payment protection insurance can help anyone, you still want to find the right policy for you. When you get a loan or credit card, many lenders will offer payment protection insurance, but you might want to compare your options before making a final decision.
You can use an insurance broker to compare rates and coverage terms from some of the top insurance companies on the market, allowing you to get the best possible deal.
Searching for a quality policy takes time, but it will save you a lot of money in the long run. Putting in the effort to find a plan that fits your needs will enable you to get coverage that makes sense for your situation.