(PRWEB) May 24, 2008
Families across the country could be wasting close to £500m every year by paying over the odds to their lenders on mortgage protection insurance.
As households nationwide brace themselves for the full impact of the credit crunch, high street banks are targeting them with sky-high rates on protecting their income, according to leading insurer Columbus Direct.
New research conducted by Columbus during March 2008 reveals that high street banks are raking in cash from concerned consumers, with some charging around twice as much as necessary to cover monthly outgoings. Worst performing was Abbey, charging almost £65 per month for £1,000 of cover, followed closely by Barclays and Woolwich, each charging almost £60 per month for the same level of cover.
The Association of British Insurers revealed in 2006 that 20 per cent of British mortgage-holders have mortgage protection cover (around 2.3m homes), and that 71 per cent of those with cover take it directly from their mortgage provider.
Although cover is available from some companies for as little as £400 per year, Columbus estimates that homeowners taking out protection from their lender could be spending around £689 for the same level of cover, essentially wasting around £289 each per year. Spread across every home taking its insurance from its lender, this equates to a staggering £471m bill for Britons every year, simply because they are failing to shop around.
"There's just no need for people to be paying so much," says Rob Thomas from Columbus. "We're constantly being told that we're in an unstable economy, you only have to look in the paper to see that jobs are going, and people want to know that they're safe in case theirs is next. We think that it's scandalous that banks are charging so much to cover their own customers. It's a natural thought to turn to your bank or lender when looking at this kind of insurance but, at the same time, you'd expect them to be looking to provide you with a good deal. This is a bank robbery that's hitting everyone, so we've launched our own payment protection product to bring some equality to the market."
Figure A - Prices by organisation
Mortgage Protection provider
Bradford & Bingley
Cheltenham & Gloucester
Alliance & Leicester
Chris Ewens or Michael Portz at Octopus Communications. Email columbus @ octopuscomms.net or call 0845 3 700 655.
Notes to Editors:
Established in 1988, Columbus Direct is celebrating its twentieth year as one of the UK's leading travel insurance specialists, and now also offers home, car and mortgage payment insurance. Columbus Direct is renowned for offering a range of dedicated policies for people with pre-existing medical conditions, ensuring that they can travel safely for a reasonable price.
Columbus Financial Protection is available on the web at [1 Research was commissioned by Columbus Direct and was conducted during the first week of March 2008 by independent research group Aware. Monthly premiums quoted based on an individual aged between 21-30 taking cover for £1,000 mortgage & bills - cover to include Accident, Sickness and Unemployment from day 1. See figure A for more detail
 [3 Average annual premium from eight lenders surveyed (excluding Columbus) is £689. £689 - £400 is £289
 71% of 2,297,900 homes = 1,631,509. 1,631,509 x £289 = £471,506,101