Dramatic Increase In Payment Protection Insurance Claims
We have reported on a number of occasions about payment protection insurance (PPI) and mortgage payment protection insurance (MPPI), emphasising the importance of this type of plan for anybody who may have outstanding debts on a homeowner loan, credit card or personal loan.
PPI policies are designed to cover the monthly repayments on an individual’s loan, or other debt, for a fixed term (usually one or two years) in the event of the policyholder suffering from either accident, sickness or unemployment and can prove to be invaluable if one of these events should happen to the borrower, in many cases such a plan can make the difference between maintaining a clean credit history, or falling into serious arrears on the loan.
As the economic slow down continues and the UK is now fully in recession, unemployment has seen a dramatic increase over the course of the past six months or so and not surprisingly, there has been a corresponding increase in the number of unemployment claims on PPI policies over the same period.
In November 2007 there were 8,772 unemployment claims made on PPI policies, in November last year this had risen to 19,105, which shows an increase of an incredible 118 per cent over the previous year.
Nick Starling of the Association of British Insurers (ABI) said “Many people are already feeling the effects of the recession, through rising unemployment. Losing your job is stressful enough and even more so when you don’t have any protection in place to help ease the financial burden. These figures are alarming, showing just how valuable PPI and other types of protection insurance are during difficult times.”
There has recently been an increase in the number of people applying for PPI policies, on the back of employment worries, but it is important to note that if you are in the situation where your employer is cutting jobs and you are already under threat of redundancy, it may be too late to apply for a PPI plan as it is unlikely to pay out on unemployment if the threat already existed.
