What does a payment protection insurance policy cover?

Payment protection insurance (PPI) may be taken out with any kind of loan, it is designed to cover your repayments for the loan in case you fall victim to an accident, become sick or unemployed. If you can't work, PPI will make the repayments for you, leaving you with one less bill to worry because your monthly payments have been taken care of. Another feature of this cover is that if you were to die within the term of your loan, PPI would pay off the outstanding debt.

Once the doctor has signed you off sick and a specific waiting time (normally a period of one month) has elapsed, PPI will cover your repayments. To encourage you to get back to work, the PPI payments will only last for a certain period, such as 12 or 24 months. The total monthly repayment is limited to a maximum amount per month.

What happens if you are out of work for longer than you expected, or for longer than you saved for?

Payment protection insurance is a safety net that you can use to make your loan repayments should you run into difficulties.

Am I eligible for payment protection insurance?

To be eligible you must be: between the ages of 18 and 65; in active employment on a steady wage working at least 16 hours a week; and a UK resident.

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