Payment protection insurance: payment protection insurance is sold to borrowers providing reassurance that credit repayments will be covered if they fall on hard times, due to unforeseen events including redundancy, disability or illness.
| Auteur | Donnellon, Brien |
| Fonction | MONEY |
As mentioned in last month's article, the sub-prime crisis has sent shockwaves through the financial services industry and caused substantial losses to financial markets globally. Fears and problems relating to other forms of sub-prime credit, including credit cards, retail and commercial loans, are increasing as well, thus causing financial uncertainty at all levels.
Market analysts believe that a slowdown in the economy could be more significant than previously believed and there could be a negative impact on the job market for up to 48 months.
In industrialised countries, the majority of workers carry some form of debt, whether it is a mortgage, car loan, credit card or overdraft. Those who wish to protect themselves against an inability to repay have a few options.
One is to transfer the risk to a family member with the resources to insure the financial commitment. Another is to purchase special insurance to cover the risk. Life and disability insurance can help cover most health risks, but job loss remains a major worry.
To that end, specialist insurers in Europe now offer Payment Protection Insurance (PPI) to cover monthly responsibilities--credit card, loan or general house-hold costs such as telephone bills, electricity or even rent--in the event of unemployment or disability.
One example is Genworth Financial, a leading global insurance company that offers a wide range of PPI products in Switzerland and across Europe.
Genworth Financial's General Manager in Switzerland, York Engelskirchen answered our questions about this product.
Brien Donnellon, Swiss News: In Switzerland PPI is virtually unheard of. Is it a new product?
York Engelskirchen: It is a relatively new concept in Switzerland but payment protection insurance has existed for over 100 years, helping consumers meet their payment obligations on outstanding financial commitments including mortgages, personal loans and credit card debt.
Payment difficulties can be due to involuntary unemployment, illness or permanent disability and death.
How does it work?
Payment protection insurance maintains the monthly repayments on outstanding financial commitments, such as mortgages, personal loans or credit cards, in the event of a misfortune such as illness, accident, involuntary unemployment, temporary incapacity, permanent disability or death.
PPI helps consumers to meet their payment obligations and to maintain financial status and lifestyle. It protects their relationship with the...
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