James Daley: How to avoid being a victim of the rip-off

Related Topics

British consumers have been ripped off by overpriced and inadequate payment protection insurance (PPI) policies for well over a decade. Today, the industry is worth around £5bn-a-year and is estimated to account for as much as 20 per cent of UK consumer profits for some banks.

In spite of numerous inquiries – including a continuing Competition Commission investigation – thousands of loan, credit card and mortgage customers are still being strong-armed into buying these products every year, even though they are often unsuitable.

The idea behind PPI is a sound one, however. If you are out of work due to ill health or redundancy, the policies are designed to make sure you do not need to worry about your debt repayments. The problem is that most do not start paying out until you have been out of work for at least six months, while the providers make it remarkably difficult to make a claim.

Then, there is the issue of price. In many cases, banks' PPI policies can prove more expensive than the repayments on the loan.

However, it is possible to pick up policies for much less. Independent brokers such as British Insurance, ( www.britishinsurance.com) sell policies for less than £3 a month. And whatever you are told when you take out a loan or a mortgage, remember it should never be compulsory to take out a PPI policy at the point of sale. If you are sure you want a policy, make sure you shop around.

Websites such as www.moneysupermarket.com allow you to compare the best prices on offer.

For most people, however, PPI will not be the best solution. If you are worried about being out of job due to sickness or redundancy, then why stop at simply insuring your loan or mortgage repayments? Income protection policies can offer you cover for your entire salary, ensuring you can pay all your bills if you are unable to work. Furthermore, unlike most PPI policies, income protection will continue to pay out for as long as you are out of work. Many PPI policies are only good for a year or two.

It may also be worth considering taking out critical illness cover, which pays a lump sum if you are diagnosed with a serious medical condition. Independent brokers such as Lifesearch ( www.lifesearch.co.uk) will search the market to find the best-value protection products for your needs.

But before you buy protection, it is worth checking what your employer offers. Many large companies have insurance for their staff, and will pay a proportion of your salary if you cannot work because of illness.

Resist the hard sell from your bank or credit card provider. You will almost certainly find better value elsewhere.

Click here to have your say

React Now

Latest stories from i100
Have you tried new the Independent Digital Edition apps?
iJobs Job Widget
iJobs General

Recruitment Genius: 3rd Line Virtualisation, Windows & Server Engineer

£40000 - £47000 per annum: Recruitment Genius: A 3rd Line Virtualisation / Sto...

Recruitment Genius: Refrigeration and Air Conditioning Service Engineer

£26000 - £35000 per annum: Recruitment Genius: A successful national service f...

Recruitment Genius: Business Development Executive / Sales - OTE £25,000

£15000 - £25000 per annum: Recruitment Genius: This is an opportunity to join ...

Recruitment Genius: Sales Administrator - Fixed Term Contract

£17500 - £20000 per annum: Recruitment Genius: We currently require an experie...

Day In a Page

Read Next

Not only is Liz Kendall a shy Tory, but her words are also likely to appeal to racists

Charlie Brinkhurst Cuff
Andy Coulson  

Andy Coulson: With former News of the World editor cleared of perjury charges, what will he do next?

James Cusick James Cusick
Syria civil war: Meet the military commander who says his soldiers will not rest until every inch of their war torn country is free of Islamist 'terrorists'

‘We won’t stop until Syria is back to normal’

Near the front lines with Islamist-controlled towns where Assad’s troops were besieged just last month, Robert Fisk meets a commander confidently preparing his soldiers for battle
Fifa corruption: Strip Qatar of the World Cup? Not likely

Strip Qatar of the World Cup? Not likely

But if a real smoking gun is found, that might change things, says Tom Peck
Twenty two years later Jurassic Park series faces questions over accuracy of the fictional dinosaurs in it

Tyrannosaurus wrecked?

Twenty two years on, Jurassic Park faces questions over accuracy
The inside story of how Bill Clinton built a $2bn global foundation may undermine Hillary's chances

The inside story of how Bill Clinton built a $2bn global foundation...

... and how it may undermine Hillary's chances in 2016
Genes greatly influence when and how many babies a woman will have, study finds

Mother’s genes play key role in decision to start a family

Study's findings suggest that human fertility is still evolving
12 best olive oils

Extra-virgin, cold-press, early-harvest, ultra-premium: 12 best olive oils

Choosing an olive oil is a surprising minefield. Save yourself the hassle with our handy guide
Rafa Benitez Real Madrid unveiling: New manager full of emotion at Bernabeu homecoming

Benitez full of emotion at Bernabeu homecoming

There were tears in the former Liverpool manager’s eyes as he was unveiled as Real Madrid coach. But the Spaniard knows he must make tough decisions if he is to succeed
England can win the Ashes – and Elvis Presley will present the urn

England can win the Ashes – and Elvis will present the urn

In their last five Test, they have lost two and drawn two and defeated an India side last summer who thought that turning up was competing, says Stephen Brenkley
Sepp Blatter resignation: The beginning of Fifa's long road to reform?

Does Blatter's departure mean Fifa will automatically clean up its act?

Don't bet on it, says Tom Peck
Charles Kennedy: The baby of the House who grew into a Lib Dem giant

The baby of the House who grew into a Lib Dem giant

Charles Kennedy was consistently a man of the centre-left, dedicated to social justice, but was also a champion of liberty and an opponent of the nanny-state, says Baroness Williams
Syria civil war: The harrowing testament of a five-year-old victim of this endless conflict

The harrowing testament of a five-year-old victim of Syria's endless civil war

Sahar Qanbar lost her mother and brother as civilians and government soldiers fought side by side after being surrounded by brutal Islamist fighters. Robert Fisk visited her
The future of songwriting: How streaming is changing everything we know about making music

The future of songwriting

How streaming is changing everything we know about making music
William Shemin and Henry Johnson: Jewish and black soldiers receive World War I Medal of Honor amid claims of discrimination

Recognition at long last

Jewish and black soldiers who fought in WWI finally receive medals after claims of discrimination
Beating obesity: The new pacemaker which helps over-eaters

Beating obesity

The new pacemaker which helps over-eaters
9 best women's festival waterproofs

Ready for rain: 9 best women's festival waterproofs

These are the macs to keep your denim dry and your hair frizz-free(ish)