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Be prepared for the consequences of the Credit Crunch; shop around for Payment Protection Insurance before it's too late!

With the financial crisis in full swing, now may not seem to be the best time to go out and spend more money on yet another insurance policy. In fact, recent surveys show that more and more people are cutting back on their insurance costs with nearly 20 million Brits cancelling insurance policies or pension contributions in October. In such times of economic turbulence however, it is unwise to chance not being protected against potential risks which are directly linked to your financial security. Although releasing money may help in the short-run, the policies which you cancel now may gravely affect your family in the long-run.

What is Payment Protection Insurance (PPI)?

PPI is a type of insurance that provides an income to maintain loan and debt repayments as well as general monthly bills and living expenses in the event of being made redundant. This type of cover is applicable when a person is no longer able to earn an income due to involuntary unemployment, sickness or an accident. PPI is available in a variety of forms as well as sold under a multitude of names including:

• Accident Sickness and Unemployment Insurance (ASU)
• Premium Protection Insurance
• Income Protection Insurance
• Mortgage Payment Protection
• Loan Protection Insurance
• Credit Card Repayment Protection (CRRP)

These are all variations of PPI, which offer different forms of cover and compensation depending on the policy schemes. Finding the right PPI policy can be complicated and time-consuming but if you use online insurance companies and seek professional advice, the whole process becomes a lot easier and more bearable!

Why PPI is important…NOW? With people in the UK losing their jobs at the fastest rates since 1991, Payment Protection Insurance should be on your list of top priorities when considering the financial security of you and your family. In addition to the number of unemployed rising by 140,000 to 1.82 million; the highest level of unemployment Britain has seen since the end of 1997, the cost of living also continues to go up. In order to understand the significance of PPI it is worth considering these following facts regarding the financial crisis:

• Utility bills, food prices, rental payments and mortgages are consistently fast-rising.

• Almost 20,000 properties were re-possessed in the first half of the year due to homeowners failing to meet their mortgage payments.

• The number of properties to be re-possessed is predicted to rise to 45,000 by the end of the year.

• At present there are already 170,000 borrowers behind on their payments.

• Only 1 in 3 adults in the UK has insurance that will provide them with an income if they are made redundant.

• The number of people claiming jobseekers allowance has risen with an increase of 36,500, making it 980,900.

How can PPI help?

Those losing their jobs are finding it increasingly difficult to maintain their mortgage and loan payments as well other general payments needed to look after themselves and their families. However, with the right PPI policy you can protect yourself against these difficulties in the event that you become part of the growing number of unemployed Brits. Payment Protection Insurance, depending on which policy scheme you choose, provides you with an income to pay for you mortgage, loans, credit card payments, utility bills and day-to-day living. Some policies will put money straight into your account whilst others will pay your owed payments directly themselves. There are a number of different types of PPI policies as you saw earlier so you can choose exactly what you buy cover for.

Genera Tips and Warnings:

• Check to see whether you are entitled to a redundancy package from your employer

• If you have a redundancy package, check your terms and establish whether or not you could rely on the compensation to survive if you were to lose your job.

• If your contract does not stipulate a sum you may only be entitled to statutory redundancy which consists of a minimum payment from your employer calculated by the Government.

• Remember that if your employer goes bust, regardless of your contract you are only guaranteed the statutory minimum.

• Be aware of the fact that during such times of significant financial strain and rising unemployment, crime rates, theft and burglary in particular, also rise. Crime prevention should be taken even more seriously.

• If you have insurance which has PPI bundled into the policy, check to see what your guarantees are. Usually, PPI that is included as an extra in another policy is very unspecific and should therefore not be relied on.

• Don't purchase you PPI policy from banks and building societies as they have been known to mis-sell these policies as well as charge exceedingly over-priced premiums.

• Buy PPI now when you don’t need it, before you find yourself without a job and it’s too late!

Finding the right PPI policy:

Finding the right PPI policy can be quite complicated seeing as there are so many different types of policy schemes and levels of cover, which therefore make it quite tricky for you to know which type of insurance you need. Before you start looking around for Payment Protection Insurance, speak to an advisor about your finances to establish what kind of protection would be of most benefit to you. Once you understand more about PPI and your own financial situation, shop around using insurance comparison companies in order to find the competitively priced PPI policies which best meet your insurance requirements.