Something I learned in my degree which could clarify this is that whilst it is true that a product is something which has been made by man or machine in the manufacturing process there are other uses for the word........In marketing we learned that actually a product is ANYTHING which can be offered to the market to satisfy a want or need. This would explain the financial retailers using PPI as a product in the marketing process. If you think about it the banks provide the service not the policy itself as a result the PPI is a by product of the service the banks offer. It's only after the marketing process when you go into retailing that products are then thought of as a physical entity.
In the financial world the contracts that have been created and drawn up are essentially a product because they have been thought about, written, legally checked and have been put on the market for people to buy.....It's not the PPI itself I have a problem with as I think during an economic downturn a lot of people probably wished they had PPI when companies started going bust, but as usual it's the banks which take the piss by mis-selling what is a handy tool for those people that feel they want a bit of added protection!
At the end of the day a product can be a physical entity or a non physical entity, photographs that people sell are essentially products and so are mp3s all of which aren't physicaly there you just download them yet are still products......Microsoft windows is a physical product if you have it on disc, yet download it and it becomes a non physical product.....Therefore it need not have a presence (Of which at least with PPI you can have a document) to be classed as a product.
But I appreciate the rant!