The Association of British Insurers announced that the number people claiming unemployment had risen sharply from 8,772 in November 2007 to 19,105 in January this year. The effects of this recession are now starting to have a direct impact on ordinary people who are now losing their jobs. Losing your job can be traumatic, extremely stressful and unbearable when you don't have any protection in place to help ease your financial burden. Insurance is often seen as a waste of money by many people whilst others want to be totally protected against any eventuality. Of course insurance is the biggest waste of money if you never make a claim. These current increases are alarming they demonstrate that our jobs are not as safe as we thought they were.
Why do you need PPI?
Never has it been more important for working people with homes and families to protect themselves against loss of income due to ill health, an accident or redundancy. Payment Protection Insurance cover is arranged to protect the borrowers against the risk of not being able to pay their monthly payments on their mortgage, utility bills (gas, electricity, water and council tax), personal loans and credit card bills. In August 2007 it was announced that we were in a credit crunch, things were going to get worse as the money supply dry up and the recession took hold. Nearly eighteen months on the unemployment figures now stand at two million people unemployed. Everyday the news networks announce yet more job losses and redundancies and if the predictions are to be believed these unemployment figures could well rise to more than three million this year.
Fines imposed by the regulators for mis-selling
There has been much controversy about the mis-selling of Payment Premium Insurance cover. Fines totalling £22.7 million have been imposed on financial providers for mis-selling products and Alliance and Leicester received the largest fine of £7 million for mis-selling. PPI has provided the banks, finance companies and retailers with a major source of income in the past.
The providers received commissions from 25% to 75% of the total payment for the protection policy taken out. This is outrageous! If you have taken out a loan in the past with Payment Protection Insurance cover included you could claim your money back in most cases. Lloyds Banking Group, Alliance & Leicester, Barclays, The Co-Operative Bank, RBS and The Nat West have stopped selling single premium payment protection insurance with unsecured personal loans at the time of providing a loan. They have all agreed to wait 14 days after the loan was arranged before selling clients any single PPI cover.
Providers make changes!
Payment Protection Insurance (PPI) providers are now withdrawing unemployment only covers as a stand alone product. Unemployment cover is now only available when sold alongside accident and sickness cover. Providers have also increased the cost of their PPI covers in some cases by as much as 20% on all new and existing policies and they are also stating that they will not pay out any claims within the first three months of a new policy.
It's not to late to arrange PPI cover
In the current economic climate it remains crucial that we have the appropriate insurance to protect ourselves in order to pay our bills and commitments. Most of us fear repossession of our homes and losing everything we have worked so hard to obtain. It is not too late to arrange Payment Protection Insurance and it is better to be safe than sorry. The Council of Mortgage Lenders is encouraging all mortgage borrowers to consider the advantages of taking out independent mortgage payment protection insurance (MPPI).
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