Problems with PPI

Exclusions and extra interest – find out why you should avoid PPI

Although there are clear rules that any firm or advisor selling a PPI policy has to follow, mis-selling is still a problem and consumers could be missing out on claiming back money that is rightfully theirs.

PPI on credit cards
With credit cards, we have found that many of our customers believed getting PPI was a condition of their credit card deal, or that their application was more likely to be accepted if they had it.

Medical exclusions
Payment protection insurance policies often have many exclusions, so you can't be certain that you'll get any money if you do make a claim. For example, if you have a medical condition (even if this isn't particularly serious) when you take out the insurance and weren't told about any exclusion relating to this, you won't be covered for anything that can be linked to that condition – in fact, you may not be covered at all. Most policies also won't cover you for conditions such as back pain or stress.

You could still be paying after your protection has expired
Most PPI policies only last for five years, so if your loan or finance agreement term lasts for longer than this, you'll still be paying interest on insurance that has long since expired.

Store cards and mortgages
PPI linked to mortgages, credit cards or store cards usually pays out for a limited amount of time only. Most often this is just 12 months, though some policies offer a 24-month pay-out period. On some credit card PPI, the insurance only covers the minimum monthly payment, meaning your balance may never reduce.

Payment protection insurance is too expensive
Adding PPI to a £7,500 five-year loan could cost an additional £2,000-£3,000. Consumers could end up paying interest on the insurance premium and the loan.

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