Burgesses – Loanprotectionplus
HEALTH INSURANCE - 1ST JUNE 2004
The company:
Burgesses is one of the better-known payment protection insurance specialists, thanks largely to its high profile MD Simon Burgess – the man who brought you alien abduction insurance, amongst other things. Despite that, the company has a serious side and has long provided loan payment protection insurance that undercuts high street lenders and retailers. This plan is underwritten by Compass Underwriting on behalf of certain underwriters at Lloyd’s, with death and critical illness benefits underwritten by Sterling Life.
The product:
The plan is designed to protect loan repayments for up to five years. It pays out on:
• Death – from any cause
• Surviving for at least 28 days after being diagnosed with or undergoing cancer; coronary artery by-pass surgery; heart attack; kidney failure; major organ transplant; multiple sclerosis or stroke.
• Disability – being unable to work
• Unemployment
In the case of the life and critical illness benefits, the outstanding loan will be repaid to the lender. Otherwise, the monthly benefit insured will be payable until up to the end of the policy term.
There is an initial 120-day exclusion period for unemployment benefit and a 30-day waiting period before disability or unemployment benefits is payable. Pre-existing conditions are excluded and policyholders must be aged between 18 and 60, actively working, and living permanently in the UK, Channel Islands or Isle of Man. Cover ceases if the loan is repaid. Exclusions are fairly standard for this type of cover. Back-related and mental conditions require a specialist’s confirmation that the disability prevents the insured from working.
Competitiveness and price:
This type of cover is not cheap, but the rates undercut those charged by many lenders.
Literature:
A simple four-page A4 leaflet explains the outline of the plan and includes an application form and direct debit details. The full policy wording (which meets the Plain English Campaign’s Crystalmark standard and includes information on how to claim) can be downloaded. This neatly allows clients (and intermediaries) to see exactly what the cover is, without needing to have a brochure that details every benefit and exclusion (provided of course, that they have internet access).
Commission:
20% of each premium paid
What they say:
Burgesses MD Simon Burgess says: “We have endeavoured to put an element of best advice into the sale of payment protection insurance with this totally flexible product that has none of the pitfalls normally associated with this type of insurance. Furthermore, because we are not as greedy as our competitors, our premiums are at least a third less than their ‘best offerings’.”
What we say:
This has long been a lucrative market for lenders and retailers but, provided that you know when your clients take out loans, you can undercut those rates. This plan covers disability, unemployment, death and critical illness and, though premiums are still costly, the cover is quite good and the plan does meet a need. Clients are likely to be better off having long term income protection but if this is the type of cover they want now, then Burgesses’ plan is worth considering.
Pros and cons:
Pros
• Wide cover
• Undercuts lenders’ and retailers’ premium rates
• Choice of terms – up to five years
Cons
• In absolute terms premiums are still quite expensive
• Cover may be withdrawn or benefits or premiums changed at 30 days’ notice.
Heath Insurance rating: 3 out of 5
