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 they secured their mortgage with.
Figures compiled by online financial services company Low.ie through an iReach Nationwide Survey which focused on mortgage holders in Ireland reveal that 51% 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.
Additionally, 45% of mortgage holders in Leinster felt that they were pressured into taking out mortgage protection with the bank where they secured their mortgage.
Aside from Bank of Ireland, all banks in Ireland only deal with Irish Life for their mortgage protection, while Bank of Ireland solely uses their wholly owned subsidiary, New Ireland.
70% 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 does 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 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% 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, 49% 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.
Peter O’Reilly CEO of Low.ie, said: “I find it disgraceful to see how much the banks are pulling the wool over people’s eyes, and the results of this survey clearly show us that the customer is not Number one in the bank's eyes.
"Sadly, not only are Irish mortgage holders paying over the odds on their mortgage rates, but they are also doing likewise on their bank provided mortgage protection.
“One would think that after their starring role in the recession, banks would strive to do right by their customers.
"When almost half of mortgage holders in Ireland state that they felt pressurised into taking out mortgage protection with the bank that issue them with their mortgage loan, it shows that little seems to have changed.
"Banks continue to focus more on their P& L rather than providing best advice to their customers.
“Some consumers are not shopping around out of inertia or choice but for many mortgage holders they are not even being given the option to shop around by their banks when they take out mortgage protection.
"For 51% of people in Leinster not to be made aware of the fact that they can take out mortgage protection with an independent financial broker only serves the interest of the bank and does not offer the customer a competitive option.
“Many people will automatically take out a mortgage protection policy with the bank where they have received their mortgage loan as they feel almost grateful to have been given a mortgage.
"They are under absolutely no obligation to do this and they should not be rushed into signing up for mortgage protection as not only is it not competitively priced, but they are also being limited to just one life insurance company.
"Anyone who is taking out a mortgage loan should shop around to find the best deals from independent financial brokers like Low.ie who analyse the whole market.
"For many first-time buyers who are new to the property market it can be quite an overwhelming experience when agreeing on mortgage terms, and many of them are very quick to sign on for mortgage protection with their banks which could end up costing them thousands of euro extra in the long run.”