Post Office Launches New PPI Scheme

June 19, 2006

By Peter Kenny

The Post Office has launched a new payment protection insurance (PPI) scheme and is sure to shake up a much-maligned industry.

Named Lifestyle Protection, this new payment protection insurance aims to cut the cost of cover by over 80 per cent. Lifestyle Protection is a welcome addition to an industry, which is currently under investigation from the Office of Fair Trading (OFT). Recently PPI plans have come under widespread criticism and condemnation due to allegations of mis-selling, overpricing and heavy handed policy terms and conditions.

Borrowers take out payment protection insurance to cover credit card and loan repayments in case of incapacity to work. This incapacity covers sickness and unemployment. Credit card and loan repayments between £100 and £2500 can be covered up to a maximum of 60 per cent of a consumer’s gross monthly salary.

Post Office managing director, Alan Cook said, "We are challenging the market with this product, which offers cover where others do not, such as for back and stress-related conditions, and payment for the whole period you are off work"

A standalone PPI policy like the Post Office’s Lifestyle Protection plan, which covers a wide range of credit, has an advantage over similar schemes offered by the credit card or loan providers, which are exclusive to their own products.

One drawback is that the Lifestyle Protection policy, underwritten by AXA, could be withdrawn at any time with just 30 days notice.

For more information contact the Post Office on 0800 633 5967