Mortgage Protection Cover Price Rise

ITIL

Unbelievably unfair!! CARDIFF PINNACLE INSURANCE.
I’ve been paying, a rather high priced complete mortgage protection cover for nearly ten years with Cardiff Pinnacle through Northern Rock. It's over seventy pounds a month. Yesterday I received a letter from them saying that because of the financial climate they would be putting it up by £26 !!! per month from the next monthly payment.

How can this be lawful? Insurance is about transferring risk. I paid to transfer my risk to them and now because the financial climate is as it is they want to take more money from their customers to subsidise what they are now paying out.

I just don't understand, what protection have I actually had 9 years and 9k later??? I'd have been better off putting it in the bank.

I can understand high premiums for new customers but not for those they have been taking money off for years. They have me backed in the corner. I can't afford not to have it and I am loathe to walk away given what I have paid out but I can't afford nearly £100 a month.

If anyone can advise me I would appreciate it...

luckyfool

Shop around to replace it. MPPI and unemployment insurance is a General Insurance contract and the premiums can be reviewed each year unfortunately, and the costs have increased across the industry. The fact that yours was taken out direct with your lender would tend to suggest to me that it is possibly expensive and could be beaten elsewhere. Normally taking a new policy out separately from a new house purchase or mortgage would mean that you would be excluded from claiming for 6 months for unemployment, however some providers will waive that exclusion as long as you are replacing an equivalent policy with another insurer (i.e. this 6 month clause is designed to exclude people just signing up when they feel a redundancy is looming).

dunstonh

How can this be lawful?

Easy. The premiums are reviewable.

Insurance is about transferring risk.

Its about sharing risk. The risk has gone up so the cost goes up. Just like it went down after the last recession ended. You cant have it both ways.

I'd have been better off putting it in the bank.

Why didnt you? Of course, you wouldnt be saying that if you had to claim.

I can understand high premiums for new customers but not for those they have been taking money off for years.

MPPI or PPI is pay as you go. You pay for the current period. It doesnt matter what you paid in past years as you got what you paid for.

Cost obviously wasnt a concern of yours when you bought it as you used a bank/building society (so effectively paying upto around 50% more than you needed to). You bought from an expensive distribution channel .

Had premiums not dropped after the last recession you may have had a point but as they did, you don't.

snowmaid

dunstonh wrote: »

Cost obviously wasnt a concern of yours when you bought it as you used a bank/building society (so effectively paying upto around 50% more than you needed to). You bought from an expensive distribution channel .

That is harsh and unnecessary. The OP took out insurance 9 years ago. At that time we never had as much information available as we do today, eg through moneysavingexpert. It is easy to criticise now when one has more info available. Cost comparable websites etc were not what they are now.

ITIL

Thank you for the more supportive and constructive comments. Snowmaid is right, when I took this out most people didn't know about alternative insurers and usually went with the mortgage providor.

I had tried to look into replacing it in recent years but struggled to get any back to day one cover and I've been in a redundancy situation three times in the last four years but never claimed as I was fortunate enough to get back to work swiftly. I'll speak to a financial advisor and see what I can sort out to replace it.

Thank you to those who contributed with some useful comment. It's my first post and it's nice to get some empathy and support

dunstonh

That is harsh and unnecessary

But true. Sometimes its like that. However, it was just one sentence in the response and text can sometimes appear more blunt than intended. Especially when the response isnt agreeing with you.

The OP took out insurance 9 years ago. At that time we never had as much information available as we do today, eg through moneysavingexpert.

The information was not available on the internet as it is now but it was still available by other means.

It is easy to criticise now when one has more info available. Cost comparable websites etc were not what they are now.

Any IFA, insurance broker or whole of market mortgage adviser would have easily beaten the bank back then (just as they can now). That hasnt changed in decades. Comparison sites started to appear 7-8 years ago for the DIY market. Yet the premiums continued to be paid for that period. We are talking figures of probably double what was available for that whole period.

when I took this out most people didn't know about alternative insurers

Not correct I'm afraid. The majority of transactions have always gone through brokers, IFAs and whole of market advisers. The banks love people like you though. You are their prime market.

ITIL

Well good for you, so it's your area of expertise.
This is a forum for advice not chastisement. I'm safe in the knowledge that if anyone asked a question in my own area of expertise I'd be a little more gracious in my response!