The phrases “deep in recession” and “credit crunch” have been ringing in our ears for months now. So it’s no surprise to see that payment protection products are more popular than ever. But it’s worrying to hear that the consumer watchdog, Which?, has released a report shwowing two million people in the UK are being mis-sold payment protection.

Payment protection provides you with cover for debt repayments if you’re unable to work and earn the same income – but you need to be on your toes when buying this cover.

The truth behind payment protection

To spot the mis-selling, you need to know why it happens. The biggest villains (according to the Competition Commission, OFT and the FSA) are the banks. Each policy can be set up for an average cost of £20 but the provider will earn up to £1,200 each time. So the motivation is clear.

Have you been mis-sold?

Despite protests from the banks, the Government put a ban on mortgage and loan providers from selling payment protection simultaneously with a mortgage or loan. This is designed to remove pressure selling of a highly marked up product and gives customers time to research the market.

If you can answer “NO” to any of the following questions, you may have been mis-sold payment protection insurance:

  • If the cover was optional, was this made clear to you by anyone?
  • If you took out a loan or finance agreement, did the sales person make it clear you would have to pay for the payment protection up front, in one payment?
  • If you had to pay for your cover in one payment, did the sales person make it clear the cost would be added to the loaned amount and therefore be included in the total on which you would be paying interest?
  • Was the term of your single premium payment protection made clear? It could end before your repayments, leaving you unprotected. If this is the case, did they also make it clear that you could still be paying interest on the premium whilst not being protected?
  • Did the person selling your the policy make all of the exclusions clear to you? e.g. pre-existing medical conditions

It’s scary to see the underhand tactics which some companies have used to sell payment protection insurance. The best advice is simple: always read the small print of any policy, don’t be afraid to ask questions and never be pushed into buying anything.

Harvey is passionate about getting you the best insurance deals possible.

Article Source:http://www.articlesbase.com/insurance-articles/payment-protection-beware-of-the-cowboys-1022502.html