Homeowners waste millions buying mortgage lender’s life cover

Financially stretched homeowners could be overpaying by £310 million every year by taking out life insurance with their mortgage provider, which many mistakenly believe is compulsory.

A study by the Post Office reveals that over a third (34 per cent) of people completing a mortgage application bought life insurance through their mortgage provider, which could be costing them an additional £2000 each.

Confusion appears to be the main reason for people choosing to take out life insurance this way; 35 per cent said they felt pressured into buying it, or believed it was compulsory to purchase life insurance with the same provider.

Over half (54 per cent) of respondents said it was simply more convenient to arrange their life insurance and mortgage together, despite the fact they could be wasting hundreds of pounds by failing to shop around.

Worryingly, it seems many people are actually aware they are not getting the best deal, as only 16 per cent said that their mortgage provider offered the best value on life insurance.

Duncan Caesar-Gordon, head of protection at the Post Office, said: “Homeowners’ finances are already being stretched on a daily basis, so it’s essential that people save money where they can.

“This is why it’s vital that homeowners understand it is not a requirement to take out life insurance with the same company which provides your mortgage. People have the right to shop around across the market and decide for themselves which product offers them the best value and is the most suitable for their life cover needs.”

For more information, visit postoffice.co.uk.