Consumers need help to understand PPI

Mon, 14 Apr 2008

According to new research, a staggering 94 per cent of insurers believe that the FSA needs to help consumers understand the difference between personal protection insurance and income protection .

Insurers were asked a wide range of questions by financial advisers Lifesearch in its annual study, which revealed that an overwhelming majority were in support of better information on the subject being made available for consumers.

"The industry and the regulator really should act on this issue," said a LifeSearch spokesperson. Income protection insurance will pay out should there be a loss of income and can be used to pay for anything, but payment protection insurance (PPI) only covers repayments on a loan .

The miss-selling of PPI products by banks and other organisations, who have promoted the profitable insurance alongside loans, has given it a bad reputation among consumers. Protection experts say this negative perception is harming the industry.

Kevin Carr, head of protection at LifeSearch, said: "PPI is a vastly inferior product compared to income protection insurance, but a lot of consumers aren't even aware of it. Far fewer income protection policies are sold than PPI, and this should be the reverse."
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