Payment protection insurance

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Payment protection insurance

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jema
Downsizer Moderator

Joined: 28 Oct 2004
Posts: 28235
Location: escaped from Swindon

Posted: Mon Jul 25, 05 2:44 pm Post subject: Payment protection insurance
Radio4 just came up with some figures that are pretty extreme. A staggering 5 Billion paid into these schemes in premiums yearly in the UK, and only 10% of that going out again in claims! I always thought it was one hell of a scam, but I would never have guessed at how bad it was.

Jonnyboy

Joined: 29 Oct 2004
Posts: 23956
Location: under some rain.

Posted: Mon Jul 25, 05 2:46 pm Post subject:
Never got it, never will. It's always been a profit scam. You pay money to protect the lender from bad debt if your financial circumstances go tits up.

tawny owl

Joined: 29 Apr 2005
Posts: 563
Location: Hampshire

Posted: Mon Jul 25, 05 2:47 pm Post subject: Re: Payment protection insurance

jema wrote:

I always thought it was one hell of a scam, but I would never have guessed at how bad it was.

Totally. I get the Motley Fool newsletter, which is full of useful money-saving tips, and they have been totally scathing about these for years. They don't like extended warranties either - they reckon most appliances last far longer than shops make out (and having owned three sets of them, including a washing machine that lasted 13 years, I agree). I worked out once that I'd need at least three items to fail in the same year while still under the extended warranty to make them pay, and how likely is that??

sean
Downsizer Moderator

Joined: 28 Oct 2004
Posts: 42219
Location: North Devon

Posted: Mon Jul 25, 05 2:48 pm Post subject:
Indeed. Mortgage Indemnity Guarantee stuff was ludicrous as well.

jema
Downsizer Moderator

Joined: 28 Oct 2004
Posts: 28235
Location: escaped from Swindon

Posted: Mon Jul 25, 05 2:56 pm Post subject:

sean wrote:

Indeed. Mortgage Indemnity Guarantee stuff was ludicrous as well.

But on that one, you often had no option but to sign up

twoscoops

Joined: 28 Oct 2004
Posts: 1924
Location: Warwickshire

Posted: Mon Jul 25, 05 2:56 pm Post subject:
What a con. The bank asks you if you want protection (�the premiums work out at just 79p a week�) and then they add it up for the duration of the term, stick it on top of the loan you are taking out and then charge you interest for it. ARRRGGHH!!!!!!

Treacodactyl
Downsizer Moderator

Joined: 28 Oct 2004
Posts: 25795
Location: Jumping on the bandwagon of opportunism

Posted: Mon Jul 25, 05 7:11 pm Post subject:

jema wrote:

sean wrote:

Indeed. Mortgage Indemnity Guarantee stuff was ludicrous as well.

But on that one, you often had no option but to sign up

I'm not sure if that's strictly legal. I know many lenders did do that but you may be able to complain to the FSA. I know I managed to get out of the MIG when I got a 95% mortgage ages ago, but then I was working for the lender at the time but they didn't like it.

sean
Downsizer Moderator

Joined: 28 Oct 2004
Posts: 42219
Location: North Devon

Posted: Mon Jul 25, 05 7:13 pm Post subject:
I think all the lenders have dropped it now.

jema
Downsizer Moderator

Joined: 28 Oct 2004
Posts: 28235
Location: escaped from Swindon

Posted: Mon Jul 25, 05 7:14 pm Post subject:
Does anyone in the insurance industry know the norms for premiums compared to payouts? The 10% rate is self evidently a scummy rip off. But what about car insurance etc?

sean
Downsizer Moderator

Joined: 28 Oct 2004
Posts: 42219
Location: North Devon

Posted: Mon Jul 25, 05 7:45 pm Post subject:
I'd have assumed that was about average. Unless you need insurance (for a car or because you have a mortgage) you'll always end up ahead of the game by paying into a deposit account. The trouble is most of us aren't self-disciplined enough to do it that way.

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