In life, you always have to account for contingencies. You can never tell when emergency situations may occur. If you're not prepared, you will end up being overwhelmed. Not only will this stress you out, but the financial consequences can be quite burdensome as well. That's why it pays to think about taking out the proper insurance policies. You can never go wrong in investing in the right kind of coverage. For example, there are the usual life and health insurance policies. There is also vehicle insurance coverage for those owning such means of transportation. However, there are still other situations to take into account.
For example, it also cannot be avoided that we have to borrow money once in a while. That's why we take out loans and enter into credit agreements. It's also the reason why we rely so much on credit cards. But this also gives rise to another problem which we cannot always foresee. Take the case when you suddenly become unemployed or incapacitated to continue working. In such a situation, you won't have any regular income to make your repayments. For sure, you will incur in defaults and this will lead to even bigger headaches in the future. Hence, it's also recommended to take out a payment protection insurance if you can afford it.
A payment protection insurance can guarantee that you will still be able to make your repayments even when contingencies arise. It is usually designed to cover you for a specific period of time while you try to get things together again. In other words, it buys you time to think of more feasible solutions to meet your financial obligations. It is not intended to cover all your debts. However, there are some people who do not fully understand the concept of a payment protection insurance policy. As a result, they end up taking out the wrong kind of coverage.
This is where mis-selling of such policies became controversial. More than just a few people were victims of this scheme. They overpaid on their policies because they were not informed that they could actually shop around before settling on a coverage. They end up buying a branded package and paying for the same at a much higher price. This also started the move for claiming PPI refunds. For this reason, you should always be careful when you engage in such transactions. Make sure you research a policy thoroughly and see if it addresses your needs.