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'Payment Protection Insurance (known as PPI) is also referred to as credit insurance, loan repayment insurance, and credit protection insurance. It is not the same thing as income protection insurance. PPI is available through banks and other types of service providers as an addition to a loan or credit product.
PPI enables consumers to guarantee repayment of loans in the event that the borrower becomes disabled or ill, is retrenched, dies, or encounters a circumstance that prohibits them from repaying their loan. PPI typically covers the minimum repayments for a limited period of time (say 1 year). After this time period the borrower then has to find another way to service the debt.
While the PPI policy is taken out by the borrower, the payout of a claim goes to the company that provided credit to the borrower.'