Demystifying PPI
What is PPI ? How does it work? And what does it even stand for?
Starting with the easiest question first, PPI stands for payment protection insurance, although you may also hear it referred to as credit protection insurance or loan repayment insurance. The intent of PPI is simply this – to protect a loan holder from financial ruin if they are unable to make payments on a loan due to specific circumstances. Circumstances that are covered under PPI policies typically include inability to work due to accidents, illness, death or loss of job. Consumers can purchase PPI alongside mortgages and auto loans as well as credit cards and other types of loans.
If a policy holder finds himself unable to make a loan payment, he then files PPI claims against the policy. In the case of accident or illness, payments are covered until the policy holder is able to return to work and start earning and income again. In the case of job loss, payments are covered until the policy holder secures another position.
PPI can be extremely valuable and a true lifeline in times of personal and financial crisis. However, it can also be detrimental if it is not properly administered by the lender or understood by the consumer.
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Invest In Your Life
Fixed income investing has become more popular in recent years since those who are investing want less risk and more of a sure thing.
Fixed term investments offer a “fixed” amount of income, which does fluctuate over the course of the investment life.
This investment method works well for those people who don’t want to worry about market fluctuations. They just want to know their return up front. Fixed term investments are safe and secure with little risk, but also offer low returns
A fixed income security is only as good as the organization that issues it. If you buy a bond from a company and they don’t have any money to pay the interest then you are out of luck. Some forms of investments may include:
- CDs – They pay a fixed rate of interest over a pre-defined term, they can be a good way to lock in a certain rate of return, particularly if you believe that interest rates may soon fall. They are one of the safer investments.
- Bonds – They generally provide higher rates of interest than other bank accounts, so fixed term bonds are ideal for people who have spare money that they can afford to lock away for a fixed period of time.
- Zero coupon bonds – They still involve lending money to a government or company but instead of receiving regular interest payments you get the “interest” at the end of the term.
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Options of the financial plan
The packages offered by the monetary planners usually have a standard contract attached, but according to the client’s needs, the terms of those contracts can be adjusted. For example, you are allowed to choose the sums you are willing to deposit every month, but you can also choose if you want to attach a retirement plan to this package or not. However, not all the advisers are willing to modify their standard contracts, so you will need to know some facts about the financial planning companies before signing a contract with one or the other. Your savings and your investments are placed in a savings account of the financial planner, and the value of this account will be at your disposal all the time. The investment programs will offer you the possibility to protect the saved sums against the effects of inflation. Moreover, you can secure the earning sin time, as you have an investment plan at your disposal that guarantees you that the value of the investment unit will never go down.
The frequency of payments are accessible, as you can choose to deposit money in those accounts every month, semester or month, and you can always decide to invest more using the supplementary rates and to build the future you want for your child. There is also the possibility to choose the method for withdrawing the money at the end of the saving period. For example, you can choose monthly payments for a fixed duration, but you can also choose a single payment, or some combinations of those. As a smart employer, you can always establish some plans of this kind for your employees, ensuring their fidelity for a long time. It is great to have such an option in your benefits package, as the employees usually consider this as an important aspect.
Read MoreA little help from friends: Cash loans
Once in a while, an extenuating circumstance will arise and people will not be prepared for it, financially. This could be a sudden health issue, car breaking down or a number of other incidents. Cash loans and pay day loans can be a lifesaver in these types of situations.
Cash loans are small loans that are generally given to people that need some quick cash in between paydays. These loans generally get paid back once pay day rolls around again. There are a number of businesses both online and not that offer these quick cash loans. These businesses will offer different amounts of quick cash loans, so research goes a long way. It is important to research these companies thoroughly, and get references from them, in order to validate their integrity.
Another option is to borrow money from friends or family. These people will recognize the affected person’s hardship and may give the person more time to pay them back. Borrowing money from loved ones can be a slippery slope, however, and money should be paid back in a timely manner.
Cash loans can help turn an emergency situation into a manageable one, with the help of some quick cash.
A look at Debt Relief Orders
In 2011′s second quarter, there were 7,257 DROs – or Debt Relief Orders – entered into in England and Wales, marking the highest number since they were first introduced in 2009.
This figure also showed a 6.9% increase on 2011′s previous quarter, when 6,788 people entered a Debt Relief Order in order to regain control of their unaffordable, unsecured debts.
But what exactly is a DRO, and what does it involve? Let’s take a look.
What is a DRO?
A DRO – Debt Relief Order – is a type of insolvency solution designed for people who can’t afford to repay their unsecured debts, and have a low available income and few assets.
Many people in serious debt problems consider bankruptcy as the most suitable approach to their situation. However, the high up-front cost of the fees involved – which can currently cost £700 in total – could understandably be off-putting for people already in serious financial trouble. In some cases, it could mean bankruptcy just isn’t an option.
DROs were introduced as a low-cost alternative to bankruptcy. They’ve helped a lot of people who have unaffordable debts and limited income/assets to go towards them.
You might be eligible for a Debt Relief Order if:
- You have unsecured, unaffordable debts of no more than £15,000
- You have total assets worth less than £300 (and if you own a car, it must be worth less than £1,000)
- You have a disposable income (after essential costs) of less than £50 per month
- You haven’t had a DRO in the past six years
- You are not involved in any other form of insolvency.
If you’re seriously struggling with your unsecured debts, a DRO won’t be necessarily be the most suitable approach, so speak to a debt adviser first to find the best way of tackling the problem.
How does a DRO work?
A DRO can only be applied for through an ‘approved intermediary’, who can talk you through your finances and help you decide if a DRO is right for your situation.
If you qualify for a DRO, after you’ve paid the £90 application fee (which can be paid in instalments if necessary), the approved intermediary can complete the application on your behalf.
If your DRO application is successful, you’ll have a 12-month ‘moratorium’ period placed on your unsecured debt repayments – which means you won’t have to make any payments during that time and interest will be frozen, so your debts won’t continue to grow.
You’ll also be protected from any further action from your lenders and if, after 12 months, your circumstances haven’t improved, all debts included in the DRO will be written off.
Having said that, your DRO will stay on your credit history for six years, which could make it harder to access further credit in that time.
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