Research by Burgesses, the insurance protection company, reveals that consumers could save more than 1,400 on a 7,500 loan by buying loan protection insurance independently rather than through banks.
Simon Burgess, managing director of Burgesses, says: “The findings reveal that banks continue to profiteer from selling this product and that people are paying a heavy price for failing to shop around.
“They are succumbing to underhand tactics often used by banks, which include adding the cost of cover to the loan without necessarily telling people they have done so.”
Burgesses recommend that before signing an agreement consumers should check carefully that loan protection insurance has not been included in the cost of the loan.
If protection is included, consumers should make sure they fully understand what they are covered for and how much it will cost them.
They should also consider what the benefits will be if they lose their job because they could be better off with an income protection policy rather than loan protection.
Finally, Burgesses advise that consumers can complain to the company and potentially have a case to take to the Financial Ombudsman Service if they have been mis-sold a policy.