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.

Consider whether you have other insurance which already covers you, or whether other types of protection insurance may be more appropriate. Would taking out PPI be to your advantage?

Ask 1st Call 4 Mortgages to explain the terms and conditions of the policy and make sure you read the Key Features Illustration Policy Summary.

A lender may require you to take out life insurance to pay off your mortgage should you die. You can also get insurance to protect your income or just your mortgage payments if you become ill or disabled, or lose your job.