Single premium PPI policies rubbished

The British Insurance Brokers Association (BIBA) has branded single premium payment protection insurance (PPI) policies "bad value" and called for them to be outlawed as part of a clean-up of the PPI industry.

It's urging the industry to switch to monthly premiums as they offer more choice and control for consumers, and should also be cheaper. And it wants more competition in the £5 billion-a-year market plus - not surprisingly - a drive to inform consumers that they can buy PPI independently and don't have to take the cover on offer from their loan company.

Currently, there are an estimated 20 million PPI policies in force, with most sold by banks, building societies, credit card firms and other financial institutions. The policies are designed to meet loan repayments should a borrower fall ill or lose their job.

The cost of a single premium policy is usually added to the loan amount with the result that consumers will ultimately pay interest on the cost of the insurance. Regular monthly premiums will generally not attract interest charges.

The Office of Fair Trading is investigating the market following complaints from the National Association of Citizens Advice Bureaux.

BIBA chief executive Eric Galbraith makes the point that whilst many consumers need this type of cover some of course do not and should seek advice around broader income protection, critical illness, permanent health or similar products.

Click here for a list of low rate loans available without PPI insurance