This is the UK’s most important money-saving opportunity. It is the result of The Citizens Advice Bureau bringing the mis-selling of Payment Protection Insurance, (PPI), to the attention of British citizens. For those who were not mis-sold, it is time to share some good news!
So far
Which? and Money Saving Expert are the most prominent consumer advocacy bodies. Money Saving Expert and Which? were the first to announce how consumers could seek compensation for PPI mis-selling. After a huge rearguard action at the High Court by Banks, the final victory was declared in favor of the FSA/Office of Fair Trading. Mass compensation was then granted and nearly two million people who had been mis-sold PPI coverage were compensated.
What’s new?
The FSA completed a final cleanup exercise in 2012, just as it seemed that the PPI claims industry had done everything it could to make public PPI compensation. The FSA instructed all Payment Protection Insurance providers to send letters to PPI customers inviting them to file a claim if they were mis-sold. These letters will trigger another PS3bn of compensation payments. This is amazing considering the amount already paid to those who have claimed.
What about those who were not mis-sold?
Mortgage payers can also rejoice if they have purchased Mortgage Payment Protection Insurance. This product is useful for everyone, especially young families who don’t have enough savings to pay major bills. Despite the fact that it was called “payment protection”, it was not widely missold. The FSA recommends that this coverage be considered as part of a financial security package . However, the payment is made monthly and the coverage is only used as often as necessary.
All holders of Mortgage Protection Insurance must receive annual statements in the form letters starting April 2012. Every statement will encourage consumers to shop around. The FSA insists that each statement must include the URL of the Money Advice Service. These price comparison tables allow consumers to compare similar coverage from different providers.
Why is important?
This cover is available for a fraction of the cost. Consumers can save hundreds of pounds each year through switching to cheaper insurance, especially online. It is possible to bypass the huge commissions that banks and building societies paid, which drove up prices. Many online specialists offer an easy and risk-free switching process that guarantees no interruption in coverage. As customers abandon bank policies, banks will likely experience another decline in revenue. They can switch to direct providers to get the same coverage with lower premiums.
In general, mortgage payment protection insurance will pay up to PS1,500 per monthly, for up to one year, if the policyholder is unable to work because of illness, accident, or unemployment. The UK’s unemployment rate is still at 3 million. This means that not only are people and families constantly at risk of being laid off, but also the time it takes to get back on their feet. This insurance is designed to help bridge the gap between jobs, and add to any savings. Importantly, insurance payments aren’t taxed. They don’t prevent policyholders from claiming State Benefits.
The mortgage payment protection insurance is one of the most affordable options for individuals to cover the large difference between State Benefit entitlements and bills they must pay. Job Seeker’s allowance is currently at PS67.50 per weekly. The weekly cost of basic family coverage has been estimated at PS500. This coverage could be beneficial to many people, as well as those who are currently insured and could switch providers to save PS100.
“A minimum of one letter from their Bank/Building Society this year will be positive news for millions. It should give people the chance to seek the Money Advice Service’s advice and to compare the prices they pay each month with those charged elsewhere. Money Advice Sevice, an independent and impartial UK Government-sponsored organisation that publishes price comparison charts, adds tremendous credibility to their message. Dennis Haggerty Income Insurance expert.
For the first time, mandatory annual statements will begin to be sent from April 2012. This will affect thousands of people who didn’t know they were paying protection insurance premiums every month. Many mortgage companies have avoided highlighting this fact in the past. This premium was previously collected with the monthly mortgage payment. These statements may lead to customers, so don’t be surprised.
- Transferring their Mortgage Payment Protection Insurance to a far cheaper on-line provider
- As thousands more realize they were mis-sold a product, they are making new claims for compensation
2012 is expected to bring more misery for financial institutions as the FSA strives for transparency in product and price information.
Dennis Haggerty FCII M IDM Marketing Manager iprotectinsurance.co.uk is an expert in income protection insurance. He is a specialist in low-cost on-line Lifestyle Protection, Income Protection, and Mortgage Payment Protection Insurance through i;protect Insurance.
The focus on providing a product selection that is exclusively online has been key to the success and growth of i.protectinsurance. i:protect is able to offer exceptional value by eliminating all costs associated with selling insurance. This includes commissions, middlemen, and telesales.
