17:17 11 November 2012
PPI or Payment Protection Insurance is one type of optional insurance that a borrower can take advantage of should they feel that they need some sort of protection.
This relates to if they are unable to continue paying for their monthly dues because of temporary sickness, unemployment or even in the event of death. PPI is designed to help cover monthly expenses up to one year, or as soon as repayments are able to be made again.
On paper, PPI is a good thing. The only bad aspect of it is that some banks and financial institutions have exploited it.
Instead of presenting Payment Protection Insurance as optional insurance, some banks are believed to have made it sound like PPI was legally required in order for borrowers to obtain credit –which isn’t the case.
For two decades, hundreds and thousands of borrowers were sold PPI – most of them allegedly not knowing. Because of this, banks made millions of pounds.
Now that the “scam” is out in the open, people who were wrongly charged for PPI are eligible for a refund. It is important to recognize however, that this is not automatic. Borrowers need to file a claim in order to get their money back.
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