Mortgage holders wasting thousands on life insurance

Millions of mortgage holders are wasting money by taking out life insurance from their loan provider

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Tuesday, 22, Mar 2005 04:49

One mortgage-holder in two takes out a life insurance policy from their mortgage provider, possibly wasting thousands of pounds on expensive cover, Sainsbury's Bank has found.

Moreover, many of the people with life insurance to cover the cost of their mortgage do not realise they are allowed to shop around for policies.

"When it comes to life insurance, the 'shopping around' message has clearly not reached many homeowners. Over half said they stuck with their mortgage provider and twenty two per cent of those who didn't, just took the first quote they were given," said Donald Jarvie, life insurance manager, Sainsbury's Bank.

He added: "The overall average difference between the cheapest and most expensive life insurance premiums can be as much as £2,927 each in premiums over the policy term.

"There is no requirement to take cover from your mortgage provider, or to take the first quote you are given, so once you know what cover you need, there's nothing to stop you comparing the quote you get with a few other providers - you could find that you can make significant savings."

Sainsbury's Bank commissioned independent research that found 7.8 million people have life insurance to cover their mortgage, with 1.9 million of these believing they were required to take out cover for their loan from their lender.