Cancel Payment Protection Insurance – Payment protection insurance is a very useful tool for those who have a loan or mortgage in their name. It also gives some peace of mind to the financial institution, which knows that even if the client’s situation changes, he will receive the payment. The disadvantage of payment protection insurance is that sometimes the client is unaware of the situations it does not cover. In this post we tell you how to cancel payment protection insurance.
What is payment protection insurance?
Payment protection insurance is insurance taken out by the holder of a loan or mortgage so that the insurance company will take over the loan repayments if the holder is unable to do so, due to some impediment, either because he has become unemployed or because his ability to pay has been reduced for some other reason.
This gives peace of mind to the credit holder with regard to making payments. The disadvantage of this type of insurance is that they are quite complex products and contain clauses that must be known and understood correctly.
Before contracting the payment protection insurance, all the coverage and conditions should be well analyzed, so that the day the coverage is needed there will be no surprises.
What does payment protection insurance cover?
It is possible to negotiate which cases are included in the payment protection insurance, as long as the insurance company accepts it. But the most common situations are the following:
- Unemployment. Special attention must be paid to this case, since it usually excludes a voluntary leave of absence, a fair dismissal or a situation in which the holder cannot receive unemployment benefits.
- Temporary disability. This item covers illnesses or accidents that prevent the holder from performing his work. Pregnancy, childbirth and maternity leave, psychological illnesses such as depression or anxiety, and sports accidents are normally excluded.
- Death. Provided it is not a suicide or a known illness.
How much can it cost?
The cost of a payment protection insurance is usually quite high, but it all depends on the coverage contracted, as well as on the exclusions and payment limits. In other words, an insurance that covers 100% of a payment will be more expensive than an insurance that covers 80%.
Therefore there is no fixed price, but it depends on:
- The installments to be covered and the maximum limit.
- The term of the loan and for how long the insurance is contracted.
- The periodicity of the payment.
How to claim if the payment protection insurance does not comply?
If your payment protection insurance does not comply with the stipulated payment term, you have two ways of claiming: by judicial means and by administrative means.
By judicial means
This consists of filing a claim in a court of law, waiting for the day of the trial and for the judge to resolve the matter.
Irregularities carried out by insurance companies can be reported to the insurance inspectors of the Directorate General of Insurance and Pension Funds (DGSFP). This body can severely sanction an insurer.
How to cancel payment protection insurance?
Like any other insurance, you can cancel payment protection insurance whenever you want. But you should be aware that, if you have contracted it for a certain period of time, you can get into trouble for not complying with the agreement.
In any case, if you pay annually, you can cancel the payment protection insurance when it comes up for renewal. In addition, if the loan or mortgage disappears you can claim that there is no object of the insurance, so it is easier to cancel the payment protection insurance.
What is important is to review the cancellation policy before taking out payment protection insurance.
Payment protection insurance is a good financial protection for many people, in case there is an unforeseen event and a loan or mortgage to pay. Now that you know how payment protection insurance works and how to cancel it, you can make the decision whether to take it out or not. But if you still have doubts, you can contact us and we will help you.