Fairinvestment.co.uk comments on the news that most large UK banks have agreed to stop selling single premium payment protection insurance.
Sharon Bratley says, “The announcement is great news for the consumer as they will really benefit from this decision by the banks to stop selling single premium loan insurance. While loan insurance can provide valuable protection in these uncertain times, it is vital that they are treated fairly and not sold something that is not appropriate. Single premium payment protection insurance is when the insurance premium is added to the total cost of the loan, that means it accrues interest, and this in turn meant that in a number of cases the customer ended up paying back a lot more than they bargained for. If the loan is cut short because it is paid off before the end of the term, then the customer might still have to pay the full amount of the loan insurance premium, unlike monthly premiums which can just be stopped. Some customers do not understand what PPI is when they are sold it, and are unaware of the costs involved. Often, they do not realise that they can shop around for PPI and do not have to get it from their loan provider, or even that they do not have to buy it at all if they do not wish."
Income protection insurance: News update: 26/01/2009