Apologies in advance for the length of this reply, I have been away for some time, and this series of posts raises a number of issues.
Hoobily
DMS offers two policies. The first is specifically designed to cover IVA payments, and benefits are paid directly to your IP, Redundancy benefits for up to 12 months, Accident or Sickness Benefits for up to 60 months. Reduced premium rates for Forum Members are £4.25 per month for each £100.00 per month of insured benefit. Online quotes and applications are at
www.protectiva.co.uk The second is our regular Income Protection cover where all benefits are payable for up to 12 months and the premium rate is £3.75, and this can be reduced to £2.75 if mortgage payments are being covered. Online quotes and applications are at
www.paymentcover.co.uk
Plasticdaft
Specimen policy wordings are available on our websites, and we are always happy to telephone Clients to explain policy wordings, exemptions to cover etc. We know what the wordings mean, because we wrote them.
NBNA
The reason most PPI benefits pay out for only 12 months is that the first 12 months benefit payments are tax free.
We did indeed approach the Insolvency Exchange to discuss the merits of PPI cover for IVA payments, and had a meeting with them. They told us that the Creditors’ position was that there was already within Insolvency Legislation a route for people unable to pay their IVA’s through Accident Sickness or Redundancy – it’s called Bankruptcy ! Such a callous attitude should not surprise us when Creditors will fight to defend a minimum Dividend of 40p in the pound, only to sell the debt for much less than that a few days later !
The Competition Commission has heavily criticised the sale of PPI by Lenders, and especially the Sale of Single Premium PPI. In our opinion the only benefit that Single Premium cover offers over regular premium is hugely increased commission to the seller. This often is as much as 70% of the single premium of say £15,000, rather than 25-30% of the regular premium of £30.00 to £40.00.
There are two types of PPI in the marketplace, the outrageously expensive type sold by Lenders, and the much more competitive type like ours that is recommended by IFA’s.
One of the CC’s main recommendations is that it should become illegal for PPI to be sold by the Lender when making the loan. At last ! The PPI industry has been receiving a fairly regular kicking in the Press for a number of years, but I have NEVER seen a single case of PPI sold to cover a mortgage in the prime market where mis-selling has been proven.
Buying Redundancy only cover produces a huge risk of a redundancy claim being terminated by a Sickness lasting as little as one day, such is the pressure on Job Centres to reduce the jobless figures.
One final point, PPI on Credit Cards is one of the more questionable practices in the industry. Thousands of people charge £1,000 to their cards each month, pay a PPI premium of £7.90, and then see their balance cleared by their regular monthly Direct Debit
Kallis3
You are quite right, PPI just buys you time, and just to show another very dubious Lender practice, when three months missed payments to a Mortgage Lender definitely meant the start of repossession proceedings, one major Lender was still selling PPI with benefits not payable until day 91, when repossession proceedings had already been started. For this cover they charged £7.20% - we charge £2.75% for this, and still pay 25% of the premium to the IFA in commission.
After the news of the past few weeks, very few of us have any further illusions about the ethics of the major Banks. PPI is likely yet to be their worst area of exposure. If you were sold a single premium PPI without also being quoted for a regular premium policy and the pros and cons of each being explained to you, in our opinion YOU WERE MISSOLD !