What does payment protection insurance (PPI) primarily protect against?

Payment protection insurance (PPI) is primarily designed to cover the borrower's loan repayments in the event that they are unable to work due to specific circumstances, primarily illness, accident, or redundancy. When an individual is unable to work, PPI steps in to ensure that they can continue to meet their financial obligations, such as loan or credit card repayments.

While loss of job can lead to an inability to work, and inability to pay a mortgage can be a consequence of not being able to work, the core function of PPI is to provide financial support during periods where the insured individual is incapacitated from working. Health-related expenses, while they may impact a person's ability to work, are not covered under PPI, as this type of insurance does not reimburse for medical costs or treatment.

Understanding these nuances clarifies why the focus of PPI is on the inability to work, which is the primary risk it aims to mitigate for consumers.