Let’s get something out in the open – financial institutions love to use fear in order to sucker people into signing up for products or service that you really don’t need. If you have a credit card, you’ve probably heard the pitch. It usually comes from a telemarketer, who tries to use fear by giving you a future scenario of hardship such as job loss in hopes of getting you to sign up for payment protection insurance.
By purchasing credit protection insurance that will handle your credit card debt if you lose your job, become disabled or die – is the promise that you get in the pitch. Sounds attractive at first, but is it really true? It’s actually anything but true and instead the payment protection insurance policies are laced with heavy duty jargon that even the best lawyers will have trouble understanding.
The best example I can give you is that payment protection insurance sounds very similar to the extended warranty on purchases such as used cars, appliances and electronics that sales people try to rope you into. If the insurance protection was that good, everyone would be signing up for it, and their cars, TVs and appliances would have infinite life spans. At the end of the day, sales people try to sell additional products and services based off of fear but running the numbers will allow you to see that these up sells are not worth it in the long run.
What are Payment Protection Plans?
Payment protection plans have hit the spotlight ever since the harsh economic times of 2008. Financial institutions are heavily pushing credit insurance onto people with various tactics that all pertain to fear. With a tough economy and job market and even the best of health could change at any time, it’s no wonder that different credit insurance protection plans like this are counting on fear and offer what seems like an easy solution in case we should become unemployed or disabled.
For only a few bucks a month, you can get the peace of mind you deserve in case of tough financial hardship due to health, job loss and other unforeseen circumstances. Unless you’re packing a dictionary, and have hours to invest into reading one of these credit protection contracts (and most of the time they won’t even show you one), credit protection insurance is rarely worth it, and doesn’t apply to 90% of credit users.
True Reason Why Payment Protection Isn’t For You
There are way too many exceptions.
If you ever tried reading one of these payment protection agreement’s (and I have), and only made it through two pages of a total of seven, one message is very clear – there are way too many exceptions. And too many exceptions usually means that there’s a less chance that it will apply to you and your scenario.
It turns out that most people who try to receive the benefits through payment protection never do because of the amount of exceptions the finance companies list. Exceptions such as involuntary unemployment and length of unemployment are two exceptions that disqualify most applicants right out of the hop.
How Can You Get Payment Protection Without the BS?
The best way you can give your self credit protection is by saving your money so you don’t need to rely on credit. And when combined with the delay of instant gratification, your need for credit will become a thing of past.
Build an Emergency Fund
Rather than investing in the payment protection with a few dollars per month, you can take those same dollars and tuck them away into an emergency fund. A few dollars here and there could lead to a solid emergency fund, and in turn you can create your own GUARANTEED payment protection plan.
Payment protection insurance is likely not for you, and the people who get it are the ones who can’t afford it the most. This comes back to the whole installment of fear through the sales pitch. If you’ve been mis-sold payment protection insurance, you’re likely not alone, but you do have options – simply make a ppi claim and they’ll work side-by-side with you to get your hard earned dollars back. At the end of it all, to sum up payment protection insurance it’s one of those products with a high cost upfront and minimal return in the end. Furthermore, most plans cover only your minimum payment, yet your monthly payment protection insurance likely won’t be higher than your minimum payment.
So, next time someone pitches payment protection insurance, simply say NO!
Readers, have you ever been pitched to purchase payment protection insurance? Did it sound enticing? What made you walk away or sign up?