Sales of loan protection are running at a rate of over 1000 an hour, with lenders raking in an astonishing £22 million a day in commission, or £8 billion per annum according to the ABI.
Loan protection is rarely out of the media spotlight and is often criticised as offering poor value for consumers with Which? among others recently dismissing Loan Protection as "offering little benefit".
Until now there has been no alternative to the loan protection offered by the lenders.
Simon Burgess, managing director of Burgesses Limited said, "Increasing borrowers debts with front loaded, and excessively priced loan protection is profiteering which must be stopped".
Andrew Hagger of Moneyfacts said: "This is good news for the consumer who now will be able to arrange alternative cover and save themselves a great deal of money (as shown in the examples below).
"The advantages of the cover available from Burgesses
"Hopefully this is the start of a new trend and we will see more of these types of policy being made available, forcing the traditional lenders to rethink their pricing structure and sales methods for this cover."
Lender Loan Amount Term Monthly repayment without insurance Cost of monthly insurance and interest Total insurance cost over term of loan Burgesses monthly premium Burgesses total premiums payable over term Customer Saving
Abbey £5000 36 months £151.32 £17.55 £631.80 £11.35 £408.60 £223.20
Egg £5000 36 months £155.91 £25.16 £905.76 £11.53 £415.08 £490.68
Halifax £10000 60 months £197.99 £40.62 £2437.20 £14.85 £891.00 £1546.20
Source: Moneyfacts February 2005
