Research commissioned by the firm revealed there is a widespread difference in the cost of the cover, with 25-year policies ranging in price from £1.60 per £100 worth of cover, up to £7.25 for the same level of cover.
The research revealed a client looking to protect mortgage repayments of £700 a month could pay anything from £11.20 to £50.25 a month. Over the length of a 25-year term, this would amount to a difference of £11,715.
Simon Burgess, managing director at britishinsurance.com said brokers must ensure they do the ground work and get the best value deal for their clients. He said: “There is no reason why more margin could not be taken out of the products in the market to provide better value for clients and help to those that really need the insurance to afford it.”
He added: “There is a huge jump in the prices available, although the products are broadly similar. Brokers turning to specialist providers still need to be aware there are huge price differentials at work and make sure they provide good value to their clients. The protection gap is widening and we need to do everything we can to help younger borrowers stay on the property ladder.”
Peter Chadborn, protection specialist at CBK, agreed advisers should ensure they search the whole market when finding a deal, but warned MPPI might not always be the best options for clients.
He said: “Advisers must ensure they look at the benefits of the cover and not be swayed by price. They must also ensure they are adequately researching clients’ needs as it is all too easy to give clients MPPI, when sometimes, income protection might actually be the better option.”
