I don’t know about anyone else, but I recently made a claim for missold PPI (payment protection insurance). Luckily, writing letters is something I quite enjoy doing so I took on the task of reclaiming my money myself. It was actually quite easy.
My first PPI policy was ‘given’ to me when I took out my very first mortgage in 1998. I was young with no financial background whatsoever so simply did as I was told! It has become evident over the last few years that these policies were often not necessary and in some instances, wouldn’t have paid out even if a claim was made. Unfortunately I didn’t know that at the time so every time my mortgage lender changed, my PPI provider changed. Needless to say, I’ve had a few different policies over the years!
Whilst wading my way through years and years of (hoarded) paperwork, I also found that I had other insurance policies in force – life insurance and endowment. I know it sounds ridiculous saying that I had no idea I even had these policies but I can guarantee a few of you are reading this saying ‘me too’!
Until I came across these other policies, I hadn’t given much thought to life insurance or other protection insurance. To be honest, I thought most protection policies were pretty much the same as PPI and I had considered cancelling the policies I held. I think a lot of consumers at the moment think life insurance and PPI are much the same. Fortunately, being employed within the financial industry I was able to find out a little more about the cover these and other protection policies provide.
‘Have you ever considered what would happen if you were to die unexpectedly? Or where your income would come from if you were to suffer from a serious or critical illness’?’ This is what I was asked. Ask yourself the same question. It’s a morbid thought but it’s such an important question. It’s nice to think that we will all grow old gracefully and die peacefully in our sleep but let’s face it, the unexpected can and does happen.
I remember learning about a couple who had remortgaged their property to try and save some money. The interest rates had dropped considerably since they took out their previous mortgage so there were quite a few better products available on the market. The couple also decided they would take out a basic life insurance policy to cover their new mortgage. This way they knew that if the unexpected was to happen and one of them died, the surviving spouse should be able to make a claim under the policy so that the mortgage debt could be cleared.
Around six months after taking out the policy, it was discovered that one of them (Mr) had cancer. Contact was made with the broker who had arranged the protection insurance to see whether a claim might be possible. The broker had to inform the couple that as they had opted not to have critical illness cover (in addition to the life cover), they would be unable to make a claim for this illness. Very sadly, the cancer was inoperable and Mr later died. The surviving spouse was ultimately able to make a claim which is what the policy was intended for, however in hindsight, the couple had hoped to be able to remove the debt while they both had an opportunity to enjoy Mr’s last days.
It is not possible to know what is round the corner but it is possible to plan ahead and protect ourselves and our loved ones. Don’t confuse all protection policies with PPI. Some types of insurance really are worth paying for such as life insurance, critical illness insurance or income protection. Research the benefits of each different type of policy and either speak to the various insurance companies who offer these products or speak to an impartial broker who specialises in protection. It’s worth remembering that PPI was not regulated at the time it was being missold to consumers – there were no set rules in place. Consumers are now protected by the FCA when purchasing insurance products.