Payment Protection Insurance (PPI) is seen by many as a welcome comfort. You pay a monthly premium, and then your loan repayments are covered, usually for a year, if you're unable to work due to accidents, involuntary unemployment or sickness. Some also include full repayment if you die.

Do you need it?

When getting a new loan, first decide whether you actually need PPI. Go through this checklist, to work out if you actually need a policy:

• Are you covered by another policy (such as income protection)?
• Do you have savings which would cover any repayments?
• Would relatives or friends be able to help you out?
  

Answer yes to any of these, and you may be better off without PPI, as it can be expensive. In general, I'm not its greatest fan, but it does sometimes have its place.

Was your policy sold correctly?

Some people will have bought polices that are not suitable for their circumstances, e.g. for the self-employed, the unemployment element is commonly useless, as most policies' self-employment benefits are poor. Even if you're not self-employed, always read policy terms to check suitability. Often there are specific exclusions that may impact you or that you were not told about before you purchased the insurance. If you think this applies to you see the PPI Reclaiming article to see if you can reclaim the cost of your insurance.