Could payment protection insurance save your sanity?

Is your mental health so unstable that it could hinge on the presence of a financial product?

This is what the experts have suggested this week. In the midst of a global credit crunch, insuring oneself against monetary ruin could be the key to weathering the storm, both mentally and financially, Payment Protection Insurance (PPI) lobbyist Sara-Ann Burgess from Burgesses, has suggested.

Ms Burgess cites a recent report which revealed that house repossession is the event in a person's life most likely to trigger a breakdown in mental health. This may come as no surprise given the memories that can be bound with a property, and how hard one often has to work to acquire such a possession.

The report was released by PPI provider British Insurance in May this year, warning lenders that if they continued to relentlessly seize properties from clients they could find themselves accountable for record levels of mental stress.

Rethink, a mental health charity, agreed with the report's finding. It said that almost half of the UK could be at mental danger if the risk of repossession becomes a prominent factor of everyday life. This claim was based on a survey of 2,000 people, of whom 46 per cent said repossession was their main worry.

Ms Burgess said that this problem has largely been overlooked.

"Calls have frequently been made for more to be done to bail out consumers financially and reduce the number of potential stress-related illnesses, but judging from the latest mortgage arrears and repossession figures this appears to be falling on deaf ears," she said.

While the health hazards of this situation may not have been realised, a growing number of repossessions are taking place.

Statistics from the Council of Mortgage Lenders reveal that in the first half of 2008 there were 155,600 homeowners with mortgage arrears of three months or more. Furthermore, it is predicted this figure will rise to 170,000 by the end of 2008, making the necessity of payment protection insurance more important than ever for those whose financial situation is becoming increasingly difficult.

The good news is that the UK has some top experts in the field of PPI. For example, earlier this month Simon Burgess, managing director of independent PPI provider British Insurance, was named an Outstanding Consumer Champion by judges of the Global Business Excellence Awards.

He received the award after spending years lobbying PPI providers to give consumers a better deal and stressing the importance of having this kind of cover.