According to the ABI sales of loan protection are running at a rate of over 1000 an hour with lenders raking in £22 million a day in commission or £8 billion per annum, or £8 billion per annum.
Loan protection is rarely out of the media spotlight and is often criticised as offering poor value for consumers with Which? among other recently dismissing Loan Protection as “offering little benefit”.
Until now there has been no alternative to the loan protection offered by the lenders
However specialist broker Burgesses has launched a monthly loan protection policy that offers a comparable level of cover to the established lenders, but it says at a much lower cost.
Simon Burgess, Managing Director of Burgesses Limited said, “Increasing borrowers debts with front loaded, and excessively priced loan protection is profiteering which must be stopped”.
Andrew Hagger of Moneyfacts said: “This is good news for the consumer who now will be able to arrange alternative cover and save themselves a great deal of money.
The advantages of the cover available from Burgesses is that you pay your premiums monthly rather than being forced to borrow the total premium up front and then being charged interest on it for the life of your loan.
Hopefully this is the start of a new trend and we will see more of these types of policy being made available, forcing the traditional lenders to rethink their pricing structure and sales methods for this cover.”
