Maximum security
MONEY MANAGEMENT - 1ST JANUARY 2005
In association with Paymentshield, the Southport based administrator, Burgesses, the underwriting agency, has launched a new single premium mortgage payment protection insurance plan allowing for claims payments of between three to five years. The new plan, Maximum Security, provides the amount of cover needed to protect mortgage payments, life assurance premia and other mortgage costs.
Maximum Security is underwritten by Lloyd’s and is available to borrowers between 18 and 65 years old. It offers full cover for the self employed, shareholding directors, business proprietors and contract workers.
In the case of unemployment or disability, the plan will pay out a monthly benefit for up to 36 months or 60 months depending on whether the policyholder opts for three or five years’ cover. The plan is fully portable between lenders and has a premium waiver during a claim. Policyholders also have the option of additional income protection of up to £250 per month.
This protection insurance pays out claim benefits back to day one after 30, 60 or 90 days of unemployment or disability and borrowers get the initial claim payment on the day following the chosen waiting period.
MM View
Burgesses is offering an attractive product here that holds off competition form other major players such as Winterthur which offers only two to three year claims periods.
In the past, single premium policies of this kind had a bad reputation as brokers took up to 80% of premiums in the form of commission, reducing funds left to pay any potential claims. However, whereas normal commission is currently around 50% to 60%, Burgesses has it at only 30%
Ultimately, it all is down to cost and this is a competitively priced product. For example, for the 36 month term of cover, the 30 day waiting period has a premium rate of 5.25%, 60 days, 4.85% and 90 days, 4%. That is, a monthly benefit of £360 with 36 months’ cover and a 60 day waiting period would cost £628.56 per annum (£360 monthly benefit x 4.85% premium rate x 36 months = £628.56). Another bonus is that only the borrower and not the underwriter can cancel the insurance plan.
