Be aware of PPI

You might think that your bank’s source of enrichment is the interest you pay. Well, it is more than that. Increased competition in the lending sector has resulted in less profit for the lenders. Nevertheless, financial institutions earn about a billion pounds from selling payment protection insurance (PPI) policies as part of personal loans. PPI is a protection shield; if you are unable to pay back your loan or credit card payments because of sudden illness, unemployment, accidents or death,  the loan repayments are insured. This insurance can be expensive, might give limited coverage and is useless if you already have a life insurance.
Be careful! Many companies include the PPI in their quotes. Monthly repayments can increase over 25 per cent when PPI is included in the loan! The probability of you claiming PPI is very low, but if having protection gives you a peace of mind, consider acquiring an income protection policy. This insurance is designed to provide you with an income in the event of unemployment, accident or sickness. It will provide you monetary aid in almost any situation and generally covers longer periods than the PPI. Usually ₤30 a month will guarantee monthly ₤1000 of your income.
When reading through a consumer credit agreement be aware of what PPI means and the expense it involves. Make sure the quoted rate excludes the policy and if included in the loan consider evaluating other options. Nevertheless, PPI is not always a negative option. If you are planning to get a high loan amount, acquiring a PPI policy will protect you from the high risk involved.