PPI rarely pays out due to "onerous clauses"

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PPI rarely pays out due to "onerous clauses"

Borrowers who take out payment protection insurance (PPI) to cover themselves in case they fall ill or lose their job will rarely receive a payout from their policy, a finance expert has suggested.

Director of the Motley Fool David Kuo claimed there are so many "onerous clauses" that stop them receiving money in many cases.

He remarked: "They think, 'Oh, I'm getting protection in case I lose my job or fall ill', but in actual fact most of the reasons why they would want to claim on PPI are excluded."

In his view, the money made from the loan itself is "irrelevant", since lenders are picking up cash from the PPI premium sold to customers who are worried about unforeseen circumstances.

Mr Kuo made his comments following the news from the Financial Ombudsman Service that three out of every ten cases the organisation deals with relate to PPI.

This is a 58 per cent increases compared to 2009.

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