Payment protection insurance price rise at PO

[TrueBlueTerrier]

Payment protection insurance price rise makes its critics' blood boil

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When the Post Office entered the controversial payment protection insurance market three years ago, its policy was described as 'a breath of fresh air'.

But today the trusted brand stands accused of holding customers to ransom by raising the price and slashing the payout - at a time when having cover against the financial consequences of redundancy could not be more vital.

'It makes my blood boil,' says Teresa Fritz, principal researcher at consumer champion Which? 'For years, providers of payment protection insurance have reaped rich rewards from selling this cover, often inappropriately. But now, having banked all their profits, they want to make yet more profit by demanding higher premiums, knowing that most people, worried about keeping their jobs, will have no choice but to pay up. It's a scandal.'

The Post Office's Lifestyle Protection policy is provided by major French-owned insurer Axa. Like all PPI, it pays an agreed monthly sum for a maximum one year in case of accident, sickness or unemployment.

When launched in June 2006, the policy paid a maximum monthly benefit of £2,500 or 60 per cent of gross salary if less. The cost was £4.50 per £100 of monthly benefit so someone seeking maximum cover would pay a monthly premium of £112.50.

Many insurers have been fiercely criticised by Financial Mail for mis-selling expensive policies, often to people who would not be eligible to claim. However, the Post Office's policy was well received - not only did it undercut similar cover from banks and building societies, but it could also be bought as a stand-alone p o l i c y rather than with a loan.

One comparison website said: 'The introduction of this product by a trusted household name comes as a breath of fresh air to the payment protection insurance industry.' Hundreds of thousands of policies were sold through post office branches and online although the Post Office refuses to give the exact number.

But the Post Office has used a clause in the small print to suddenly increase the cost of cover. This allows it to 'change any term or condition including the premium payable by giving not less than 30 days' written notice of such change'.

It has written to policyholders telling them of a reduction in the maximum monthly benefit from £2,500 to £1,500, an increase in premium-per £100 of monthly benefit to £6.75 (a 50 per cent rise) and an increase in the period before benefit is first paid from 30 days to 90 days.

One policyholder who has just received notification of the changes is James Smith (not his real name) from Birmingham. James, a 48-year-old father of three who works in advertising, bought PPI from the Post Office five months ago, mainly to protect him against possible redundancy.

He bought online and was influenced greatly by both the Post Office's trusted brand and the reputation of provider Axa, which he has other insurance with. He has now been told that from the beginning of next month, his monthly cover will be cut from £2,500 to £1,500.

Although his monthly premium will fall from £112.50 to £101.25, it masks the fact that the cost of cover per £100 of benefit is rising. 'Initially, I was stunned that policy changes could be made like this,' says James.

'But then I discovered the policy was written on a monthly rather than on an annual basis as is the norm and that tucked away in the small print was a condition giving it the right to change any term, condition or premium by giving 30 days' notice.

'What angers me is that no one from the Post Office pointed out this key condition buried in the small print before I took out cover. If they had, I would have gone elsewhere.'

Fritz of Which? says: 'It's shameful that in the middle of a recession, PPI providers are reining back on cover and increasing its cost. This should be the insurance industry's finest hour, when it demonstrates the value of protection cover. Instead, it yet again drags its reputation into the mire.'

The Post Office says: 'We always strive to provide the best possible benefits to our customers and we've always held our terms for as long as we could, but the very tough economic climate in which we operate means that we've had to make adjustments.

'We stress that customers who are currently claiming are not affected by these changes and that we have introduced a number of options and choices to ensure that we can continue to offer this product, rather than withdrawing it.'

'I'm angry... they are profiteering from the slump'

Late last year Alison Morrison took the sensible decision to get insurance in case she lost her job or became ill and was unable to pay the mortgage on the flat she lives in with husband Cedric, 40, and son Kori, 11.

But within five months of taking it out, her insurer gave 30 days' notice of its intention to increase her monthly premiums by 40 per cent. She was incensed.

Alison, who works in marketing for Which?, is the only breadwinner because Cedric is recovering from a kidney transplant.

So cancelling the stand-alone mortgage payment protection insurance policy with Cardif Pinnacle in protest was never an option, even though when she rang to complain, that was its immediate suggestion.

Instead of opting for an increase in premiums, she chose to keep them at about the same level but cut her monthly cover from £1,500 to £1,000.

'I'm angry,' says Alison, 39, who lives in Kensal Rise, north-west London.

'I feel the insurer is using the recession to profiteer, knowing that people like myself will keep cover at any cost, even it means reducing cover or paying higher premiums.'

Cardif Pinnacle says the policy changes are a result of rising claims.

[Lounge Lizard]

Take it or leave it - That's your choice. Noone is forcing anyone to buy insurance they consider to be bad value. But then again the Daily Mail has to perpetually dream up someting to moan about.

[BELIAL]

Payment protection: Mortgage guarantee : creditor: Wakey wakey you mop heads ,it's all crap, they take your dosh but you are not covered as you thought. Oh dear another failure of regulation,we really must try harder

[Sick Postie]

All Payment Protection providers have put their rates up and don't allow you to take out a policy now unless you are changing your mortgage at the same time due to the amount of claims in the current climate. There will be a lot of people who think they are covered and won't get a penny, if your hours are cut which many have been it doesn't pay out. You have to have lost your job before it kicks in I know of people that are now only doing 12 hours a week but can't make a claim on PPI.

[BELIAL]

Anyone want to guess what percentage of your PPI premium the major high street banks cream off as commission . You are going to love this one





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