The subject of PPI, or Payment Protection Insurance, has been a controversial one for the past couple of years, with a huge amount of controversy relating to the mis-selling or this cover, and financial authorities really clamping down on lenders and providers that are found to be breaching guidelines relating to PPI sales. The bad press has resulted in more people either deciding not to take out this cover over the past couple of years, or has resulted in fewer policies being taken out because of reduced pressure from lenders and providers who are aware of the crackdown by authorities such as the Financial Services Authority.

PPI came under fire because there was evidence that it was being mis-sold to the tune of billions of pounds, with m any people being sold the cover even though they were not eligible to ever claim on it, others having the cover added to their finance without their knowledge, and some people being told that they had to take the cover in order to get the finance that they wanted. PPI is designed to meet repayments on a debt in the event that the policyholder is unable to work and earn money due to sickness, injury, or redundancy.

However, despite the controversy over PPI many people may now be questioning whether now is the time to take out this type of cover, given the rising level of unemployment as struggling firms make huge cutbacks in staffing levels. With reports that giants such as RBS and BT have decided to cut back on the jobs of thousands of staff members it is understandable that many may be worried about how they will handle their debts in the event that they lost their jobs.

Industry officials have said that there has been a marked increase in enquiries about PPI over recent weeks, as worried workers try and assess their options in the event that they lose their jobs. Whilst the protection can prove valuable for many people, and can provide valuable peace of mind, experts have warned that there can be catches, which the consumer needs to look out for, and it does not come cheap.

Some have suggested that consumers look at stand alone income protection, which covers your income in the event that you are made redundant, and the cost of this cover can vary but can start at as little as £2 per month. It is normally a set fee per £100 of income insured, and policyholders could enjoy cover for twelve months in the event that they are made redundant.

One official said: ‘Rates vary widely, from as little as £2 a month to more than £5 per £100 guaranteed.’

He also warned: ‘Many accident, sickness and unemployment policies have a clause in the small print that allows the insurer to cancel the policy or raise rates with just 28 days’ notice. If there is a severe slump and insurers start paying out lots on unemployment claims, then some may pull the plug.’

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