28 September 2015
You will read a lot about PPI, and the type of policy it is, should you take only a few minutes to research it online. Some of it, is helpful information but some simply confuses the consumer.
The whole mis-selling saga of PPI has confused some aspects of buying insurance too and thus, there are a few key points that need to be understood;
In essence, there is nothing actually wrong with the insurance product itself, it was just not the right one for people to buy and here's why:
The buying of any insurance product should follow the same pattern. Think about why you need an insurance policy to protect you, and what is it that it must protect. For example, the addition of accidental damage on content insurance significantly increases the monthly premium. Some people, perhaps those without pets or children, choose not to include this on their policy because it is not right for them.
PPI was not the right policy for many people because it was, in the case of mis-selling, too basic and did not cover what they needed it too.
As a policy, the PPI mis-sold on a wholescale level to customers across the country was undeniably basic for the amount that it cost. It offered such a scant level of cover, that only a small proportion of people to whom it was sold would have been covered by the policy.
In other words, those in fine health at the time the policy was bought, with no existing medical conditions, and a permanent, long term contract with an employer. You might think that this fits most people, but on trying to claim on the policy, you will learn that there were many other caveats.
In other words, your claim would not be valid.
As few as 15% of claim made against the PPI policy were successful, a fact that if people had known, they may have been a little more cautious about buying it.
Another failing was the way in which claims were handled. Would you be happy if you thought that claiming on an insurance product would take months? Most insurers deal with claims quickly but not PPI. It could take months to resolve a claim… if at all.