Here’s three facts about Payment Protection Insurance…

1. It’s also known as PPI
2. It’s a type of insurance
3. 9/10 people would rather buy a Traffic Warden lunch than buy PPI cover

On paper, especially right now, PPI should be selling like hot cakes, with almost 2.5 million unemployed and most of them with a mortgage or outstanding debts to pay. But it’s not and if anything people are actually dropping PPI like a hot potato and cancelling their policies to save money.

It’s a strange reality where people will happily pay for contents insurance but won’t pay to protect their actual house. Obviously, there’s more to this attitude than simply cash flow and the countless mis sold PPI policies by lenders, banks and providers has a lot to do with the public malaise for the insurance. But there needs to be a shift in opinion for PPI because it’s a spiral that leads to even more financial difficulty.

According to a recent survey by the Nottingham Building Society, one quarter of the UK have cancelled their Payment Protection Insurance and home insurance to save some cash during the downturn. Ironically there’s never been a more important time to have PPI and home insurance with unemployment and crime rising due to the recession.

Advice from the experts is to look for cheaper alternatives and switch rather than being without cover and the building society has said cutting back on insurance is a ‘false economy’. It’s easy to see why PPI is being ditched by thousands of credit card, loan and mortgage holders, but remember, when sold right, it can be an invaluable help in times of financial difficulty.

The Association of British Insurers (ABI) conducted a survey recently on public opinion of Insurance policies, in particular Payment Protection Insurance (PPI). The results, which you may think were pretty obvious given the recent raft of mis sold PPI compensation claims, showed trust in PPI is falling and job security worries are rising.

Nearly a third of those surveyed said they think the state of the economy will get worse in 2010 and a total of 31% said they were more concerned about their job than they were earlier in the year. Despite this, the research revealed that consumers are still reluctant to continue paying or take out a PPI policy that could help in a job loss situation. When asked why they no longer held a PPI policy, 30% said it was too expensive, 23% said it was no longer needed and 19% said the money was needed elsewhere.

Let’s talk Alternatives. Alternatives are great, they give us options, choice, extras and the chance of a saving. As you may have noticed, Alternatives have been a little thin on the ground lately in the PPI industry, a real rare breed. Some say even driven to extiction at the hands of greedy bonus hunters who mis-sold PPI one too many times. But now, thanks to tireless work by those selfless sorts at the OFT and FSA, real Alternatives are being re-introduced into the PPI industry.

Story-telling aside, you’ve always had options when it comes to PPI, the competition commission make sure of that, but the lenders often pushed their cover at the point of loan agreement. Pressure selling and convenience forced a lot of customers to sign up with their lenders policy which led to independent insurers losing out and reducing in number. Now though thankfully there are an increasing number of policies to choose from and later on this year: lenders will be made to wait 7-14 days before trying to sell you PPI. So you’ll have plenty of time to look into all the options available in the market place and choose the best cover for you.