Payment Protection Plans : Pros and Cons

If you have taken out any type of credit agreement in the past, whether it be a credit card, loan or hire purchase you will have been offered the payment protection plan. This is basically insurance in case of any changes in your financial circumstances, such as redundancy, sickness or an accident.

What is very important is to get value for money. Before you buy the plan, compare the actual cost of this against the cost of the credit. You may find a very high rate. There are also many types of restrictions that could hinder you if you decide that you want to make a claim. These should be investigated fully before entering into this financial agreement.

Probably, the agent who is actually trying to sell you this plan only be skilled in selling the product (i.e. the loan) and not the insurance. You may not be getting the best advice from this person, there will almost certainly be financial reward for them so you must read all the terms and conditions of the insurance carefully.

You also should be eligible for this purchase, the most obvious of reasons of not being able to claim would be not actually being employed at the time of taking the policy out.

There are new guidelines that the government want to bring into practice very soon. There have been many cases of this policy being sold to people without adequate checks. When you try to claim you are refused, the onus is left on you, you must make sure that you are eligible for this policy. The government is trying to make this a prerequisite for companies - you must be suitable for the policy being sold.