Payment protection insurance - Financial Conduct Authority

Payment protection insurance

Last Modified: 23/05/2013
PPI can cover loan or debt repayments in certain situations, and can be useful, but we found it was mis-sold to many people. Find out more about PPI.

Payment protection insurance (PPI) covers loan or debt repayments if you are unable to meet them in certain situations, such as being made redundant or not being able to work because of an accident or illness.

However, we found these policies were widely mis-sold and many people that bought them may be able to claim a refund – see how to claim for mis-sold PPI.

You may have been offered or sold a PPI policy at the same time as you took out a loan, mortgage, credit card, store card, car finance or other credit. However, from 6 April 2012 a firm generally can not sell PPI at the same time as you take out credit.

You do not have to buy PPI from the same firm that sells you one of the products above, and it usually pays to shop around for a deal that is right for you.

This type of cover may also be called loan protection, credit insurance, loan repayment insurance, ASU (accident, sickness and unemployment) insurance, account cover or payment cover.

How PPI covers you

The benefits of PPI and how the policy works vary depending on the terms and conditions.

It will generally cover monthly loan or mortgage repayments, or at least some of them, for a set period of time. This will usually be for up to 12 months but some policies can cover your repayments for a longer period.

With credit and store cards, PPI may pay a percentage of your outstanding balance or the minimum payment each month for up to a year. This might only be for the amount you owe when you make a claim, and not any balance you build up after this.

Once the claim period has ended you will have to make any outstanding repayments yourself.

If the policy includes life insurance it will generally pay off the balance of the loan or debt if you die.

Before you buy PPI

As PPI policies can differ greatly you should shop around to find one that includes the features you need.

You should always read the key policy information before you buy. This sets out information like how long the cover lasts, the main features and benefits of the policy, and any significant or unusual exclusions or conditions.

Some PPI policy features to consider include:

  • the price of the policy;
  • whether you have other insurance which could cover your repayments;
  • any limits on the amount of benefit you may receive from a claim on the policy;
  • the period of time the policy will cover your loan or debt repayments;
  • whether the cover starts as soon as you make a claim or after a certain amount of time; 
  • the types of injuries and accidents covered, and those that may be excluded (e.g. stress or back complaints);
  • whether it covers injuries or illness that you have had before taking out the policy;
  • how long you have to be employed on a permanent contract before you can make a claim; and
  • whether the policy covers you if you are self-employed.

PPI is not the only product that can protect you against loss of income and may not always be the right one for your circumstances. A couple of alternatives are income protection, which is not linked to a debt but covers loss of income, and short-term protection insurance.

Claim mis-sold PPI

Claiming for mis-sold PPI is a free, simple process you can do yourself

How to claim for mis-sold PPI

Consumer Helpline

Telephone: 0800 111 6768

See more ways to contact us

Related links

External links

Money Advice Service

Provides information and tools to help you manage your money

Financial Ombudsman Service

Helps settle consumer complaints with financial services firms

PPI claim form (doc) from FOS

Claim mis-sold PPI

See how to reclaim payment protection insurance

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UK banking brands

Check whether all of your savings are protected

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How to complain

Follow four simple steps to making a complaint

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