 |
Home buyers and holidaymakers pay too much for insurance.
Consumers could do far better if they shopped around. That is the verdict
of many consumer groups following a recent report.
When buying a home or a holiday, the item normally at
the bottom of everyone's list is insurance. Many mortgage lenders and
travel firms take advantage of this by offering package deals and products
that tie customers in. If people took just a moment to think and maybe
shopped around, they could save substantial amounts of money.
Holidaymakers have been reported to be paying up to
75% over the odds by taking cover through the travel company. The story
is very much the same for life and home insurance, with banks and building
societies charging up to 30% above the market rate.
Travel
Travel agents have ways of applying pressure, to take
insurance as part of the holiday package. Companies often refuse to take
a booking without insurance being in place. This policy makes it far more
likely that consumers will buy insurance at the time, rather than go away
to shop.
Many holiday companies have avoided the rules surrounding
"tie ins" by offering "free" cover with certain holidays.
This of course is clawed back via a higher cost for the holiday. People
should take care to investigate if the holiday would be cheaper elsewhere.
Also, companies sometimes do not ask the correct questions.
So, for example they might not ask about existing medical conditions when
selling cover.
Suzanne Rothwell of Rothwell and Towler explains…
"People with existing medical conditions may find
that policies sold to them may not cover them properly. This could be
a particular problem for people living with HIV. Travellers should read
the small print and maybe seek advice from a specialist travel insurance
provider. Buying an annual travel policy could also save money in the
long run."
Loans
Many lenders give the impression that insurance is compulsory
and imply that you might not get the loan if you don't take cover. The
premium is normally added at the start of the loan in one and if you redeem
early you should insure you receive any due refund.
Real life
Alex was placed under the impression that he would have
to take repayment protection on his new personal loan by his bank.
"I was given very little choice in the matter and
certainly not given the option to shop around"
When he checked with an independent financial adviser,
he was told a more comprehensive policy could be arranged for half the
price.
He felt cheated by the bank and requested a refund of
his premium.
The bank told him that this would not be possible!
Only when threatened with a formal complaint did they
yield and repay the premium that had been added to his personal loan.
Alex managed to half his premium by taking independent
insurance.
Mortgages
Personal loans are not the only form of borrowing where
pressure can be applied to take insurance. Even though life assurance
is not always a condition, many lenders are guilty of being economical
with the truth. Lenders sometimes take advantage if they feel customers
circumstances are a little unusual i.e. self employed and freelance. By
shopping around people may not just save on premiums, they are likely
to get a more comprehensive policy, especially on Critical Illness cover.
Mortgage lenders also tend to sell one size fits all
illness and unemployment cover. Customers sometimes take this type of
insurance and only find out that it's not relevant until it's too late.
Self employed people are frequently caught out on mortgage repayment protection,
as it normally doesn't cover them if unemployed.
What to do?
Companies often offer cheaper interest or lower repayments
if you take insurance. You should read the small print, calculate the
overall cost of the insurance and demand to know what you are being covered
for. If the cover is not appropriate, you should stand firm and state
that you do not require the cover. Banks, Lenders and Travel firms will
be less inclined to apply pressure if you threaten to take your business
elsewhere. If you feel that your new mortgage depends on insurance, then
seek advice from a qualified independent financial adviser.Rothwell and
Towler specialise in providing travel insurance for the gay community
and people living with HIV. They may be contacted on 01404 41234. suzanne@rothwellandtowler.co.uk
Here will be the body text for this particular article.
It should be pasted or imported over this text. Here will be the body
text for this particular article. It should be placed here over this text.
Here will be the body text for this particular article. It should be placed
here over this text.
|
