Tuesday, December 15, 2009

Don't go unprotected...

Here is a matter that could affect many expats where it hurts – in the pocket! However, I should preface the subject by declaring an interest in this, a close family member having had direct experience of the problem.

The subject is payment protection insurance (PPI), as applied to credit cards, and potential problems that may be encountered in becoming an expat.

Such insurance provides cover on your liability in the event of loss of employment or other disasters impacting on your ability to earn and the PPI on credit cards can include an element of life insurance as well as the principle aim of the cover - insurance in the event of involuntary unemployment, accident, sickness, etc.

All very good so far. However, certainly for Brits anyway, it seems that moving overseas, can automatically invalidate the unemployment, accident, sickness aspect on many policies. So, in becoming an expat, you can lose your right to claim under your policy.

Now, with something as significant as the actual cover becoming invalid, you might expect that the credit card companies would advise you of this change as soon as you tell them you are relocating to another country. Well, perhaps some do, but it seems that some card companies were not doing that – and, as one can go some years without ever claiming, a card holder can be unaware that their insurance has become invalid, while some card companies continue to charge the PPI premiums on the monthly card statements - even though they have been advised that the card holder has moved overseas.

In the particular cases we have seen, there seem to be good guys and bad guys... one major UK bank admitted that the card holder had notified them of their relocation and immediately refunded the relevant premiums that had been paid over some years. Another major credit card company refunded the premiums and made this statement...

“we have recently updated our processes to ensure that when a customer notifies us that they are relocating abroad, they are sent a letter informing them of the changes to their cover.”

However, another major UK High Street bank seems not to take the same view – they say that the payment protection insurance has not been valid since the card holder's move to France, so no claim would be possible, but they they are not obliged to refund the premiums paid over some years, even though the card holder had notified them of their move overseas at the time it was made. This bank has insisted that the policy has been invalid but also wants to keep most of the premiums paid, even though they have not provided the cover! They have referred the card holder to the « small print » of the insurance policy and offered a « goodwill gesture » of about 15% of the premiums paid...

Perhaps this is the level of helpful, caring banking we have all come to expect recently?

We would be interested to hear of any expat experiences of invalid PPI and if the bank has put their hands up and admitted they should have notified the client as soon as they were aware of their move overseas – or if they prefer to keep the money!!

Does this only apply to British expats or can this happen to anyone moving from their home country?

Have you been paying credit card payment protection insurance as an expat, unaware that your cover may be invalid?

Will we be naming names? Watch this space...


Stuart said...

A few years ago, it seemed probable that it would become easier for people to live in countries other than their own. The truth is that expat. status and retirement age are taken as an excuse for businesses and government agencies to make life more difficult.

Insurance policy territorial limits need to be read carefully. Cover linked to travel is usually intended only for holidays and not expat. status. Long gone are the days when an insurer would be sure to draw this to your attention when you notify your overseas address.

Similarly, the UK government will, on deciding that you are non-resident, cancel your winter fuel allowance, freeze your State pension and deny you free health care should you return to the UK and need it. Paid taxes in the UK for 40 odd years and still pay tax on your pension? It doesn't seem to matter to our elected representatives - perhaps because we are unlikely to be using our postal votes.

Will Pow said...

Bonjour Stuart - and many thanks for your comments.

Yes, I am sure that deciding to live overseas and being retired must pose a whole set of new challenges and problems... complicated further I guess if you decide to return home. It seems that a lot of expats think that returning home is the answer in this recession but, as you say, there is probably more to that than meets the eye.

On the specific subject of this post, payment protection insurance on credit cards, I think if you have asked the card company if there are any specific changes affecting your card, as well as notifying them of your move overseas, then they have to take responsibility for notifying you of something as major as your cover being invalid!

It is not really the case that "Long gone are the days when an insurer would be sure to draw this to your attention when you notify your overseas address"... as mentioned in the post, one major credit card company has actually changed their policy, so that they do indeed advise clients of this major change when they are notified of their move.

However, it seems that at least one major UK bank is not interested in putting such a simple system in place - they seem happy to continue taking the premiums and only tell you that your cover is invalid if you try to make a claim!!

Banks should be held more accountable when they are selling these insurance products, so that the consumers are protected and expats are not exploited in this way.

Kristine said...

thanks for this info. I actually did not know that and will check on this.

I dont even know if my credit card company informed me of this after I told them that I have relocated. It could be in one of those mails that they send that one thinks it's a useless circular and gets chucked out at the first instance.

Will Pow said...

Hi Kristine - it could well be that your card provider has not notified you that all or some of your cover might be invalid, but that seems to depend on the company. It also seems to vary from company-to-company as to whether they will refund premiums you have paid since you relocated.

Certainly in the UK there seems to be more than this one concern about how some payment protection schemes are operated, but we are mainly interested in relocation affecting the validity of the insurance - and whether the card holder is advised clearly about this...