Consumers
reeling from record food and fuel prices and a proposed 40% hike in utility
costs are being urged by independent Payment Protection Provider, British
Insurance, to ensure they have the means to pay their bills, should accident,
sickness or unemployment occur.
According
to a recent YouGov survey, one in five consumers would cancel their Payment
Protection Insurance to save money.
However, British Insurance Managing Director, Simon Burgess, believes now
is not the time to reject a policy that could provide a vital financial safety
net in times of hardship.
“More
than half a million people face redundancy every year and building society
research shows that 73% of the population couldn’t support their families if
they lost their job. This is a
frightening statistic and one that is easily addressed by the purchase of a
cheap, yet comprehensive policy that pays out should there be a change in
financial circumstances.”
The
PPI sector was recently berated by the Competition Commission for overcharging
consumers some £1.4bn a year and Simon believes that the immoral actions of
banks and building societies have caused people who need mortgage, loan or
income payment protection to lose faith in this cover.
“It’s
perceived as a con, yet in reality it’s a lifeline for those who lose a salary
and are without the savings to make monthly mortgage or loan payments or who are
unable to generate a level of income that would pay the plethora of bills
ranging from utilities, fuel and groceries to council tax, telecoms and other
insurance premiums.
“The
gas and electricity watchdog Energy Watch predicts the 40% hike will add £400 to
consumers’ annual energy bills and this coupled with the other price rises, plus
an increase in mortgage and loan rates, means it’ll be even harder for consumers
to meet their financial commitments.”
Burgess
continues: “No other policies pay out to prevent you going into debt and
contrary to what the larger lenders charge, cover is affordable - ours starts at
£2.15 per £100 per month for mortgages and £2.65 per £100 per month for other
loans.”
Internet
comparison sites put the cost of PPI on a ‘best buy’ £5000 loan over three years
at £470.16 in June 2006. Two years later
this spiralled to £676.80. Burgess
quotes a premium of £190.80 to protect the same amount over the same period of
time - supporting his view that it pays to shop around.
He
concludes: “People who are struggling financially now, need to consider what it
would be like if they lost their monthly income – it would be a nightmare
scenario, but one that could be avoided.
My advice to consumers is ‘hold your nerve’, take out or continue with
PPI and look around at what other monthly savings can be made. If your PPI premium is one of the most
competitive on the market, it shouldn’t make such a dent in your insurance
bill.”