Money Advice Service

Payment protection insurance (PPI) will help cover repayments if you’ve borrowed money and find yourself unable to work due to illness or injury or are made redundant. PPI products can be good value, but it pays to shop around and make sure you know exactly what you’re signing up to.

How much does it cost?

Not sure what something means? Have a look at our Protection insurance glossary.

The amount you pay for PPI will depend on how much cover you want (i.e. the repayments you want covered), but also:

  • how long you wait before your policy pays out
  • the maximum number of payments you are able to claim.

It can be good value for money if:

  • you meet all the eligibility criteria needed to claim – check the policy carefully
  • you are made redundant and won’t be able to keep up repayments on your mortgage
  • you’re sure you understand what your policy does and doesn’t cover
  • you take the time to shop around to compare prices and cover.

It’s always good to shop around to make sure you pay a reasonable price.

How much cover should you take out?

This depends on your personal circumstances.

People who take out PPI usually rely on their policy to cover their mortgage or loans, including credit card debts or car repayments.

These policies will usually cover your loan for a limited period of time, usually one year, however, some policies last up to two years.

Where to go for quotes

If you’re not sure what type of PPI you need, the best solution is to speak to a financial adviser.

Always remember that you don’t have to take the PPI policy offered by your lender. You’re free to shop around for your own policy.

There are a number of ways you can buy a PPI policy:

  • using and insurance broker
  • directly from insurance companies
  • through a price comparison website.

Using a broker

If you don’t know what type of insurance product you need, it’s a good idea to use an insurance broker.

These experts can help you find the best insurance product for you at a good price.

Still unsure? Find out more in When to use an insurance broker.

Be honest about your medical history

The vast majority of insurance claims pay out, however, when they don’t it is usually due to the right information not being provided.

It’s vital that you answer all the questions honestly and fully. If you don’t your policy might not pay out because of non-disclosure.

If you’re not sure whether or not you need to share a piece of information, it’s always best to ask your insurer.

Buying a policy

Read the small print before you take out any policy, so that you know what is and isn’t covered.

If you see something you don’t understand, ask the insurance provider, your insurance broker or financial adviser.

Changing your mind

Once you’ve bought an insurance policy you have 30 days to change your mind and ask for a full refund.

If you already have PPI is it worth switching?

Many PPI policies will only allow you to claim after you’ve been paying in for a set amount of time (the waiting period). For this reason, while switching can save you money, it might not be appropriate in every case.

Most new policies won’t include pre-existing conditions you have when a policy has been taken out. If this applies, think carefully, and always check that the provider has not imposed any restrictions or conditions at renewal.

Do you need life insurance? This product will provide some financial support to your dependants if you die.

Do you need income protection insurance? This type of insurance provides regular payments if you are unable to work due to illness or injury.

Do you need short term income protection? This solution provides short term cover to help you pay for essential outgoings if you find yourself unable to work.

Do you need critical illness insurance? This type of policy will provide you with a tax-free ‘lump sum’ if you’re diagnosed with a serious illness covered by your policy.

This article is provided by the Money Advice Service.