The Post Office has entered into the controversial, much-maligned payment protection insurance market.

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Its move has been welcomed by price comparison service uSwitch.com for providing an alternative to the costly PPI policies offered by most mainstream banks and lenders.

PPI is taken out to cover borrowers if they cannot meet credit card or loan repayments due to sickness or unemployment. But the insurance has come in for heavy criticism amid widespread concerns of mis-selling and onerous policy terms and conditions. It is currently the subject of an Office of Fair Trading inquiry.

According to the Post Office, its Lifestyle Protection policy will undercut rival plans. Cover costs £4.50 per £100 insured per month, compared with a typical £30 per £100 charged on the High Street.

Consumers can insure monthly credit and loan repayments of between £100 and £2,500, up to a maximum of 60% of their gross monthly salary. This includes cover for back and stress-related conditions.

Alan Cook, managing director of the Post Office, says: 'There are concerns that people taking out payment protection insurance are unfairly treated. We want to change that.'

Mail On Sunday

June 2006