More than half of all mortgage holders in Leinster say that they were not informed by their banks that it was possible to take out mortgage protection cover with a different provider to the bank with whom they secured their mortgage.
Figures compiled through an iReach Nationwide Survey which focused on mortgage holders in Ireland reveal that 51 percent of mortgage holders in Leinster were not made aware of the fact that they could take out a mortgage protection policy with an independent financial broker instead of their bank. This means that they ran the risk of being charged a higher premium than those that could be obtained out in the wider market.
Additionally, 45 percent of mortgage holders in Leinster felt that they were pressured into taking out mortgage protection with the bank where they secured their mortgage.
Almost 80 percent of mortgage holders surveyed in the province outside of Dublin stated that they took out their mortgage protection with a bank which is a very high proportion of people who deal with their bank for mortgage protection, particularly when those banks do not give the consumer proper choice as they do not cover the whole market.
Aside from Bank of Ireland, all banks in Ireland only deal with Irish Life for their mortgage protection, while Bank of Ireland solely use their wholly owned subsidiary, New Ireland.
Seventy percent of people surveyed in Leinster said that, at the time of taking out their mortgage protection with a bank, they were unaware that their bank was connected to just one life insurance company and that this dictated the mortgage protection policies that they were being offered.
This indicates that the majority of bank mortgage customers are missing out on the very good value and better types of mortgage protection products that are available in the wider market through independent financial brokers.
For example, Irish Life do not offer dual life mortgage protection cover and have a minimum premium of €13 per month. This compares to other life companies like Zurich Life and Royal London who have minimum monthly premiums of €10 with the former also offering a waiver of premium benefit at no extra cost and the latter also offering dual life mortgage protection cover at no extra cost.
Of course, people with mortgage protection can switch their cover to another provider at any time if they find that they can avail of a better deal elsewhere, and 84 percent of respondents in Leinster said that they would do so if it were cheaper, gave them sizable savings and ensured no dilution in cover.
Furthermore, almost 50 percent of respondents in Leinster who took out mortgage protection with their bank said that they were offered additional benefits such as serious illness cover even if they had shown no interest nor requested any information on these additional benefits for their mortgage protection cover.
Whilst banks may argue they are just doing their job well by providing this additional advice – it also happens to raise the cost of premiums significantly as well as generating sizable additional income for the banks.