Mums Finance

I think we have all been in this situation at least once; you decide to purchase, for example, a computer or a home entertainment system from one of those well known electrical retail outfits. You have either decided yourself, or been persuaded to, finance the purchase using a finance package and pay off the item in instalments. Very often a good idea, especially if you wish to establish a credit history.

Next thing that happens is almost certainly the sales person will start trying to sell you a PPI - payment protection insurance which is mean’t to cover your repayments in the event of your not being able to work for a period of time due to illness, accident or even unemployment. Most of us have agreed to take out the policy and simply signed on the dotted line without realising that we probably will never qualify to claim on it should the need ever arise. It just appears to be a good idea to take it at the time. You walk away happy and so does the sales person - he/she has just earned themselves a nice bit of commission because you took the PPI.

I signed up for one of these a few years back and found it to be totally useless. Most people do not realise that in the event of any of the unfortunate situations occuring they will get a nasty surprise when they try to make a claim. Result is that you have paid for an insurance policy that you will never be able to use. Now such organisations doing this are the subject to legal action.  The HFC Bank has been fined for misselling these policies. The insurance has been widely criticised for being too expensive and difficult to claim on. Sellers of PPI make massive profits on the product and pay incentives to staff for them to sell it.

PPI is also sold alongside mortgages, loans, credit cards and other finance deals - my advice is not to bother. Institutions are not allowed to refuse your credit application based solely on the grounds of your refusing the insurance. Just like with those useless ‘extended warranties’ that sales staff almost beg you to accept when you buy an iPod for instance. The warranty often costs more that the actual replacement value of the item you are buying so why bother!

Just say no and say it firmly.

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