Homeowners “Trapped”
PERSONAL FINANCE - 1ST JUNE 2004
Many thousands of mortgage holders who suffer from pre-existing medical conditions have found they are effectively trapped into unsuitable and often very expensive – payment protection policies, according to new research conducted by insurance broker Burgesses.
Unsuspecting borrowers are tied into deals because mortgage lenders’ mortgage payment protection insurance policies – which are supposed to pay out in the event of accident, sickness and unemployment – are non transferable between other lenders.
Alarmingly, these policies have built in pre-existing medical exclusion clauses that will exclude medical conditions that exist or have occurred within 12 month of the start date of their policy.
“It’s a shocking and outrageous reality that lenders policies are non transferable between mortgage providers,” said Burgesses spokesman Simon Burgess. “I believe the only reason for this is to tie their most vulnerable borrowers into financial arrangements that often offer poor value for money.”
“Pre-existing conditions exclusions are wholly unsatisfactory because one is effectively underwritten at the point of claim,” added Burgess. “Having a new exclusion each time one changes one’s mortgage exacerbates this further. The key is to make sure you buy a portable policy at the outset.”
