Payment Protection Insurance or PPI is a type of insurance that can be considered as “revolutionary”. This type of insurance will protect the policy holder from missing payment of their outstanding debt. If death, hospitalization or any accidents leads to inability to earn and pay for outstanding debts, then this type of insurance policy will cover the expenses until the policy holder is able to look for work and pay for the outstanding debts again.However, there are insurance providers and lenders seem to abuse this type of insurance, creating problems which led to the distrust of debtors to their lenders.

Among the problems with payment protection insurance is its very strict screening. Those who are self employed or retired will never be able to acquire this type of insurance. The reason is simple: the earning of the self employed will never be verified while the retired does not have the ability to find a source of income. This is rather unfortunate because of all the people that need payment protection; this group needs this type of insurance the most. Most payment protection insurance companies extend their assistance to people who are most likely unable to use this type of insurance.

Aside from that problem, claiming this type of insurance is known to be difficult. It is estimated that 20% or one in five claimants are only able to receive the benefits. Insurance companies would often deny claims because of some “undisclosed” information. Some companies purposely miss asking this question which would mean they will never know if you have that condition. If you are unable to work because of that condition, they will deny claim since they were never aware of the said condition.

There is also a growing concern of payment protection insurance that are forced to debtors. There are lending companies who do not approve loans if the applicant will not sign up for payment protection insurance to the insurance provider that was preferred by the lending company.

There are even companies who force their debtors to pay for an upfront fee for payment protection. This practice has led to hundreds of scams as would be debtors pay upfront fee for payment protection insurance and never to be heard of again from the fake insurance agent.

There are also lending and credit card companies who sneak in this type of insurance. You may not know it but you may be paying for payment protection insurance. These companies presuppose that you will need this type of payment and charge you with a premium every year. You may think that you’re only paying the renewal fee and its interest but you are actually paying for insurance and you were never informed.

The best way to combat this type of abuse is to be alert of all the offers you sign up for especially with lending and credit card companies. When you are contemplating of applying for this type of insurance, be sure to transact with a known company, understand their terms and conditions and provide all the information necessary for proper protection.