Summary
Every year, the loan industry earns £1 billion out of borrowers taking out payment protection insurance. The vast majority of borrowers never make a claim.

Payment Protection Insurance earns the loan industry £1 billion a year . Page 2

Author: Anna Richardson

We can back this up with figures. A mainstream bank quoted £5,150

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for PPI, against a loan of £16,000 last year. That means the borrower is £21,150 to the bank in total, and would be charged interest on that entire amount. The monthly repayments were £300, £70 of that was due to the PPI. So that's £70 a month to insure a loan of £16,000. An online search revealed that a loan of the same amount, that could also be cancelled at any time without penalty, would be just £20 per month. That is a serious saving.

If you want to get PPI, we say:

Make sure that when you get your loan quote, it is given with and without PPI - then you can see just how much it actually costs.
If you get a quote and you find that the PPI is added as a lump sum at the beginning, go no further with that company.
Always check out the competition before accepting your lender's PPI Search under "Payment Protection Insurance" or "Income Protection Insurance" and see what the online insurance companies can offer you.
Read the exclusions. This is essential because the insurance may ( car insurance policy ) not fit your needs. For example, seasonal and temporary workers are usually excluded, and this can go for contract workers too. If you've only been in your job a month, be aware that to make a claim you will normally have to be with a company for six months first. You will also find that if you become ill and you have suffered from that illness prior to taking out the insurance (called a 'pre-existing condition') you may not be covered. If any of these situations apply, you're not suitable, and there are many more exclusions.

Basically, PPI is often not worth the money. If you are ( term assurance ) taking out a big loan and really need that peace of mind, then make sure you get the cheapest deal (usually not from your lender) and take advantage of the fact that if you buy it separately, you can cancel it whenever you want. First and foremost, read the policy in full first, you may find that your situation is not applicable to its terms and exclusions.