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Last Updated: Friday, 20 October 2006, 18:05 GMT 19:05 UK
Have Your Say: Debt insurance
Notes

People who borrow money could be wasting a billion pounds a year because insurance to protect their monthly payments does not provide the cover they expected or is too expensive.

The Office of Fair Trading has warned lenders it may refer the whole market in this insurance to the Competition Commission.

It says there is no easy way for consumers to compare prices or shop around for alternative products.

What is your experience of Payment Protection Insurance?

Have you bought a policy? Were you satisfied with the sales process? Have you ever made a claim?

Read a selection of your comments below.


Payment Protection Insurance is a financial rip-off and I cannot believe it's taken authorities so long to deal with this issue.
Ali, London

We took out mortgage protection insurance in 1995. When my first husband became seriously ill in 2000, it refused to pay out until I contacted the ombudsman. Luckily, in my profession as a tax adviser I am used to dealing with large organisations and refused to be fobbed off. People who claim on these policies are usually at a very vulnerable point in their lives and deserve to be treated with courtesy and compassion, not as though they are trying to defraud the insurer.
Sarah Ashby, Bridport, Dorset

I took out PPI. I had a bonafide claim and from the outset it was clear the insurer was not going to pay, knowing my only course of redress would be to take it through the courts with the risk of costs against me. After a year of arguing I gave up. Forget PPI, it is a waste of money.
Peter, North Wales

I took out PPI on my mortgage. It advertised an extra payment of 3 per month for each 1,000 borrowed to help with bills in the event of unemployment. An insurer offers the same thing stressing this will top up state benefits. What they fail to mention is that benefits are reduced by this amount which is also only paid monthly as opposed to fortnightly for Jobseeker's Allowance. Also JSA is automatically payable on signing on. If one makes a mistake on the claim form - as I did forgetting to enclose job search details - no money is paid. Once unemployed, one cannot elect for this money to reduce capital, this restriction should be made available when the policy is taken out and this option offered. When I was unemployed I had paid premiums to receive 4,000 plus from which I received no benefit.
Paul Goodey, Westcliff on Sea

In November 2004 I lost my job. At the time I had a large bank loan and a credit card with about 3,000 on it, also from the same bank. Both the loan and the credit card were insured through the bank with an insurer. For the first few months the insurer was in regular contact with me and assured me it was dealing with my claim. Then after about 10 months I heard no more and by that time, my bank had closed my account and withdrawn the card - it did not want to know. To this day I have received no payout nor had any explanation as to why they have never paid out. Instead I have had nothing but hassle from bailiffs and am saddled with a debt for some 15,000. I would never take out PPI again. It's useless.
Clive Baulch, London

My wife has a number of store cards all attracting 29% interest and all bar one with PPI. The most shocking of all is a 1,000 bank loan at the staggering rate of 29% interest plus the PPI costs of 145 added on top. In all these cases it seems to have been taken for granted that she would want cover, however, although she has a part time job, she is also a self-employed partner in my business. As such, and as we have over 200,000 equity in our house, I don't believe she would ever be able to claim on these policies. I therefore believe that this is mis-selling and I am hoping to reclaim these costs.
Stephen

I took out a personal loan last year. I declined the PPI which would have added 30 to a monthly repayment of 100. I went online and straight away arranged cover for under a fiver a month. Sorted! Chris Morrell
Chris Morrell

I consider myself quite financially literate but the way banks and other credit institutions peddle these products is quite wrong. The payment protection fee often just appears as if by magic in the loan account or on a statement often with absolutely no mention of it whatsoever. There needs to be serious changes to the provision of these charges. The way they are sold at the moment almost appears like theft by the banks.
Andy Shaw, Northampton

I've always had insurance on my credit cards and loans, even though for my loans it has added significantly to the overall amount of debt I borrowed. I'm worried about the fact that I've now heard that if I'm made redundant I might not receive any benefits as the repayments are counted as income even though I can't use them for any other purpose than paying off my debt.
Phil, Sussex


The comments we publish are not necessarily the views of the BBC but will reflect the balance of views we have received. It is helpful if contributors state if they work for any organisation relevant to an issue discussed. Readers should form their own views on whether messages published represent undeclared interests, or views prompted by a common source.



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SEE ALSO
Debt insurance 'fails consumers'
19 Oct 06 |  Business
The protection racket
14 Jul 05 |  Inside Money

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