Payment protection insurance (PPI)

The aim of PPI is to make your loan repayments for you if you can’t work because of illness or unemployment. Typically, the policy pays out for a maximum of 12 or 24 months. Sounds a good idea, but watch out. There are usually a lot of exclusions, such as existing health problems. You might not be covered if you do casual work, short-term contracts or you are self-employed.

PPI is often expensive but it is optional – you can shop around for cover and don’t have to take it out. From April 2010 lenders will have to give you written details of any PPI they offer.

If you want to shop around for PPI, use our Comparison tables.

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