20 June 2006
The Post Office has launched a new payment protection insurance (PPI) scheme that should help to boost consumer awareness of the product.
The insurance protects consumers who have taken out loans by covering repayments in certain circumstances, for example if they fall ill or become unemployed.
PPI products have been much criticised by both consumers and official bodies as in the past they have been expensive and sold without fully informing the consumer of what the product is for or making it clear that they do not have to take out the insurance with their loan provider.
"The introduction of this product by a trusted household name comes as a breath of fresh air to the PPI industry, at a time when it is coming under increased scrutiny from consumer groups and the OFT," said Nick White, head of personal finance at price comparison website uSwitch.com.
"The product being offered by the Post Office is very competitive, and in terms of cost it is now second only to the cover offered by British Insurance, who charge £4 for every £100 of cover, as opposed to the £4.50 that the Post Office will charge."
According to the uSwitch.com, a £10,000 loan taken out over five years with Bank of Scotland has a PPI charge of £4,453.35 which increases the APR from 6.4% to 22.7%.
Purchasing PPI with the Post Office on the same loan would only cost them £524.75 - a saving of £3,928.601.
Finding the cheapest loans in the UK is quick and easy with uSwitch.com's loans comparison service
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