Payment protection insurance
This is insurance that will provide a sum of money to assist the insured in repayments on a loan. This will also act as a collateral for a loan under specific institutions.
Payment protection insurance (PPI)
Payment Protection Insurance (PPI), also known as credit insurance, credit protection insurance, or loan repayment insurance can be defined as an insurance that will provide a sum of money to assist the insured in repayments on loan or catalogues payments, in the event the insured is unable to work, as a result of accident, illness, insolvency, unemployment or death. In simple terms, depending upon the type of protections selected, PPI pays or contributes to loan repayments in the event of involuntarily unemployed. In the event of death, life cover will repay an individual’s loan balance.
Payment Protection Policies are usually sold as part of the deal when consumers obtain a loan/credit. However, it is also possible to receive a ‘stand-alone’ PPI policy. PPI policies that covers mortgage payments are termed as Mortgage Payment Protection Insurance (MPPI), which is taken out solely for ensuring the timely repayment of the mortgages. MPPI helps ease the minds of homeowners who fears missing mortgage payments due to unemployment, sickness or accident; which can ultimately lead to the repossession of their homes. Like other PPI policies, MPPI policies are of three types: unemployment only; accident and sickness only; unemployment, accident, and sickness. The exclusions applicable to MPPI are similar to that applicable to other PPI policies.
Need for PPI
PPI payouts could be a financial lifeline for those who are unable to keep up with their debt repayments. Amspex Global Limited gives a betokened Credit Protection Insurance that serves as a collateral to some lenders BUT not all. This is illustrated on our success stories as managed in the “success stories page”.
Whether an individual requires this sort of protection depends upon one’s financial circumstances and the amount of debt owed or Credit facility needed. For instance, if an individual has a sufficient amount of savings that could be utilized for repayments in the event of a drop-in income, he would not find it necessary to obtain PPI coverage.
Additionally, if a client doesn’t have enough collateral to leverage the facility, he/she can obtain a tailor-made PPI/LPI/CPI from Amspex Global Limited or our affiliate companies to bridge the difference.
Having a PPI policy can assist in paying-off debt, provided the insured conducts thorough research into the available policies and selects a policy that is inexpensive while providing suitable coverage. With regard to credit score, a loan PPI policy can assist in maintaining the insured’s current credit score since the policy enables the insured to be up-to-date in loan payments. PPI is especially beneficial during periods of financial crisis since it will enable the insured to continue paying off loans.
With regard to loan interest rates, obtaining a PPI policy doesn’t necessarily lower these rates. In many cases, when taking out a policy, the loan provider may try to make it seem like the loan interest will decrease if the insured also buys a payment protection insurance policy from the provider. However, in reality, the loan interest rate difference from the new ‘lower’ rate is latched onto the loan protection policy, which gives off the illusion that the loan interest rate has decreased; rather, the costs were merely transferred to the loan protection policy.
Products Sold with PPI
An individual may have had PPI, if he/she has taken out or used loan or credit product, such as:
How are the PPI Payments Made?
The cost of PPI policies depends upon where the insured lives, the type of policy selected, the life cover insurance that the client has, whether it is standard or age-related, and the amount of desired coverage. For loan PPIs, the premiums can be expensive, especially for individuals with poor credit history who may end up paying a substantial premium for coverage. For some loans, the entire cost of the PPI premium is added upfront to the borrowed amount. The borrower would then pay it off over the term of the loan, by paying interest on the premium; this is similar to the rest of the loan. However, this type of coverage is highly unpopular and is not permitted in many countries.
On other loans (including mortgages), borrowers mostly pay for PPI policies by a monthly premium. The PPI policies sold with loan facilities are also paid for by a monthly premium after the moratorium period is over, however, these are added to what is owed on the facility at the end of every month. The cost of the premium is calculated at a certain percentage of the total balance that is owed for a particular month. Once the claim is paid out, the monthly benefit is most often somewhere between two to ten percent of the amount owed.
We are Amspex Global Limited, a professionally managed, responsible and ethical Consultancy company, determined to be widely recognized for our bespoke financial services specially designed for your Bank Guarantee BG and Standby Letter of credit SBLC and needs; Either for lease or purchase AND major Payment Protection Insurance needs.
We ensure our work has lasting benefit by developing a close bond with our clients and being deeply committed to their success when it comes to delivering bank guarantees and standby letter of credit either for credit enhancement or as a payment guarantee. We take a very hands-on approach to our work and collaborate across all levels of client organizations, We understand that real, sustainable impact is always our end goal, and that only by working closely with our clients can we achieve this level of change. We roll up our sleeves and fully partner with our clients.