Burgesses’ Britishprotection range
HEALTH INSURANCE - 1ST MAY 2005
The company:
Burgesses is a leading provider of short term payment protection insurance plans and is now an exclusive scheme provider to broker body BIBA, whose 2,000 member firms can access its plans through brochures or online. These three products are underwritten by Bankers Insurance Company Limited and (the life element of Britishloanprotection) Bankers Life Assurance Company Limited.
The product:
Burgesses’ Britishprotection range comprises three separate monthly renewable plans, each designed to fit a particular market. The three are:
• Britishmortgageprotection. This pays up to £1,500 a month, or 50% of income if less, for up to 12 months if the insured is unable to work because of illness, disability or unemployment. The maximum benefit is 125% of all mortgage costs, including associated insurance premiums. There is a 60 day exclusion period for existing borrowers but no exclusion period for transfers in from other schemes. Benefit is paid back to day one after a 30 day deferred period. Borrowers can choose unemployment only, incapacity only or both combined.
• Britishloanprotection is similar and covers loan payments (only) up to a maximum benefit of £1,000 a month. It also repays the loan on death (where the maximum benefit is 60 times the monthly insured benefit of the outstanding loan balance if less). There is no initial waiting period.
• Britishincomeprotection pays up to £1,000 a month, or 50% of income if lower, and is not loan-related at all. There is no death benefit.
Benefits are ABI/CML compliant and the range is available to BIBA members. All plans include back to day one cover and are available from age 18 to 64 at outset. Applicants must live and work in the UK and be actively working at least 16 hours a week. Plans are available on a single or joint life basis.
Competiveness and price:
Britishmortgageprotection. The monthly premium rate (single) is £2.5% (32.50 per £100 a month benefit) for unemployment only or incapacity only of £4% for both.
Britishloanprotection. Cover costs £7.5% a month.
Britishincomeprotection. Monthly premiums are £3% for incapacity only, £4% for unemployment only and £5% for both.
Literature:
A separate A4 leaflet for each plan outlines how it works and includes the application form and direct debit mandate. Brochures are available in hard copy or can be downloaded from the website.
Commission:
20% commission a year is payable.
What they say:
Managing director Simon Burgess says: “Our intention is to provide BIBA members with a one-stop-shop for accident, sickness and unemployment insurance to enable them to claim a share of the £5 billion in annual commissions that are available in the UK alone. And a total of over £7 billion could be saved by some two million UK homeowners by switching their mortgage payment protection insurance from traditional mortgage lenders to Britishmortgageprotection.”
What we say:
High Street lenders dominate the loan related accident, sickness and unemployment market yet, often their products are overpriced relative to what brokers can offer, without offering any better cover. Brokers are also more likely to have a specialist understanding of such products and the needs they meet. But relatively few brokers sell this type of business to any extent.
Simon Burgess has developed a useful suite of plans to cover the mortgage loan and short term accident, sickness and unemployment markets with a useful commonality of conditions but enough variance to make each plan suited for its target market. And by tying in with BIBA, Burgesses opens up a new marketing channel that could persuade at least some brokers to look again at the accident, sickness and unemployment opportunity. Such brokers can be sure that the plans will undercut lender competitors while offering similar cover levels.
We still believe that long term income protection is usually a better bet, but accident, sickness and unemployment remains more popular. For many borrowers, accident, sickness and unemployment provides a solution when the need is greatest (for example, when taking on a new loan responsibility) that can be dropped later if the need falls away.
Pros and cons:
Pros
• Undercuts High Street lenders.
• Choice of three products to meet different markets.
• Products are ABI/CML compliant and simple to set up.
Cons
• Long term income protection may be a better option.
• Many brokers are yet to sell much accident, sickness and unemployment business.
• Monthly renewable plans can be changed or withdrawn at short notice.
