Skipton's free cover under fire
Thursday 15 June 1995
Despite their own criticism of Skipton's initiative, however, several top-10 building societies are asking insurers to devise almost identical policies for their borrowers.
Skipton's free policies, available from October, will not cover homebuyers in the event of accident or sickness. If they want greater protection, borrowers will have to pay more.
Skipton's exclusions come as lenders have come under fire for the tight limits on eligibility applied on mortgage protection insurance. About half the claims are made because of unemployment, with the rest attributed to accident or sickness.
Norman Shuker, joint managing director at Pinnacle Insurance, which provides cover to many mortgage lenders, said: "Current mortgage protection policies offer far wider cover and superior benefits than those proposed by Skipton.
"Although its cover would be 'free', what is its true value if it provides less cover than existing policies? Is what is being done by Skipton an example of the best practice for other lenders to follow?"
An executive at another large insurer, who refused to be named, said: "All of us are now trying to come out with packages which offer more cover for less money. The danger is that Skipton is not only jumping the gun, but offering something which may not actually fit their clients' real future needs."
Skipton's plan drew widespread publicity when it was announced last week. It pays a borrower's mortgage interest for up to seven months of a period of unemployment, after a 60-day wait. The policy dovetails with plans by the Department of Social Security not to pay mortgage interest to new borrowers for the first nine months of a claim.
Existing borrowers will wait two months and 50 per cent of their interest will be paid for four months thereafter.
For those needing full accident, sickness and unemployment cover, Skipton will charge borrowers pounds 4.50 per pounds 100 of a loan, about 30 per cent less than market rates. David Charlton, assistant general manager, said: "We have never said this was a panacea. If anyone wants insurance that includes other things, which is substantially more expensive, we have negotiated a rate two-thirds of the market rate. We are trying to protect our customers."
- 2 Rarest Beanie Baby of them all could be sold for £62,500 on eBay
- 3 Driving while dehydrated can be just as dangerous as drink driving, study suggests
- 5 Farmer told to tear down mock-Tudor castle after hiding construction behind hay bales
Alan Rickman admits editing 'terrible' script with friends in Pizza Hut behind backs of writers on Robin Hood: Prince of Thieves
Rarest Beanie Baby of them all could be sold for £62,500 on eBay
Professional big game hunter Ian Gibson crushed to death by elephant during hunt
Ben Affleck asked TV chiefs to hide slave-owning ancestry, new hacked Sony emails published by Wikileaks claim
Farmer told to tear down mock-Tudor castle after hiding construction behind hay bales
If I’m being racially abused I don’t need a stranger with a saviour complex to rescue me
The only black face in the Ukip manifesto is on the page about overseas aid
Ukip is the only main political party to not address LGBT rights in its manifesto
Food banks: One million Britons will soon be using them, according to Trussell Trust
Religion isn't growing, it is becoming vigorous in its demise, says philosopher AC Grayling
BBC election debate: The one photo that summed up the whole 90-minute leaders debate
iJobs Money & Business
£20000 - £25000 per annum + OTE £45,000: SThree: SThree Group have been well e...
£50000 - £667000 per annum + excellent benefits : Ashdown Group: IT Manager / ...
£13000 - £20000 per annum: Recruitment Genius: Scotland's leading life insuran...
£40000 - £45000 per annum + benefits : Ashdown Group: Training Programme Manag...