Money: Payment protection insurance: If you still want PPI protection …

There is nothing wrong in the principle of payment protection insurance - it's just that it was (and in some cases remains) hugely overpriced, and contained terms that made it difficult for many to claim. But what if you really want a protection policy to cover your mortgage or credit card payments if you became unemployed or fell sick?

The key is not to buy PPI from the company that sells you the mortgage, personal loan or credit card. In nearly all cases it will be poor value - and about as daft as buying overpriced travel insurance in a travel agent, rather than going online.

So where do you go? Your first step should be moneymadeclear.org.uk, the government's independent financial advice website. It offers a product comparison service, and it doesn't try to sell you anything. Moneysavingexpert.com is another useful site for finding the best value.

Moneymadeclear's PPI service asks several questions - age, employment status, etc - then gives a list of providers and costs. We asked for quotes for a 30-year-old male employed for 40 hours a week on a permanent contract.

The differences between the best quote and what you might otherwise pay, was startling. On credit cards, the cost of a policy that would pay out pounds 500 a month of cover ranged from pounds 7.90 a month at iprotect to pounds 39.50 at Capital One through to pounds 79 at MBNA. The higher-priced policies tend to offer better levels of cover, but not always.

It was a similar picture with mortgages. For a 30-year-old with an pounds 800-a-month home loan, PPI ranged from around pounds 12 a month at iprotect and Pinnacle - which works out at pounds 3,600 over the lifetime of a 25-year mortgage - through to pounds 62 at Abbey/Santander and pounds 74 at Nationwide, equal to more than pounds 22,000 over the period of the mortgage.

But these figures need to be treated cautiously. Terms and conditions vary widely, and the price will reflect the number of payments the policy will make, and how long you have to wait for it to pay out. The message is clear - shop around, go to independent suppliers and save a small fortune.

Consider the following:

* Insurers "cherry pick" customers. If they think the risk of a claim is high, they will price the policy accordingly - or turn you down. Dennis Haggerty, marketing manager of iprotect, says the company has recently taken the decision not to accept civil servants or anybody who works for a local authority, because of the risk of job cuts.

* If you have been made redundant in the last year (even if you got another job straight away), have been in a job for less than six months, or your company is already making cutbacks, most providers will not cover you.

* Older people pay more than younger people. That's because if you're 50-plus, the chances of finding a job on your former salary are slimmer, so the insurer is likely to have to pay out for longer. Claims on the sickness part of the policy are also higher.

* Most insurers do not offer instant cover, and will only confirm after making checks. Usually, these focus on your employer, with special reference to any planned lay-offs. For applicants with medical problems they may ask for a doctor's report.

* The typical "waiting period" for making a claim is 120 days. In other words, you will have to be unemployed for four months before being able to claim. In that time, you may have found another job, making the policy pointless. If you want a shorter waiting period, say 60 days, the price of the policy rises, in some case steeply.

* Policies typically pay out for 12 or 24 months. The longer the payout period, the higher the premium.

* Rates can, and will, be reviewed. If you take out mortgage protection, and unemployment starts rising steeply, the insurer may come back to you and demand higher premiums.

Haggerty, of iprotect, says the company put up rates by 5-25% earlier this year, although a few older customers saw rate increases of nearly 50%.

Cardif Pinnacle, one of the major providers of mortgage protection policies to banks and building societies, increased rates for some customers by 20% earlier this year.

* In general, low-cost providers of

PPI include iprotectinsurance.co.uk, justclick4cove.com (good for under 45s), paymentcare and britishinsurance.com.