mortgage providers’ customers represent an ideal cross-selling
opportunity, and in the UK it is one often taken advantage of at a
high cost to customers, indicates a study undertaken by Post Office
Life Insurance (POLI), a unit of the country’s postal service
utility.
Indeed, in some instances the study found that customers could
pay up to £1,971 ($3,900) too much in total over a 25-year period
for term life cover bought via their mortgage provider.
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The extra £1,971 was based on the difference in the cost of
£100,000 cover for a non-smoking male aged 40 next birthday over 25
years available from POLI (total cost £4,119) and from mortgage
provider Natwest (total cost £6,090). POLI’s products are
underwritten by Norwich Union.
The study’s findings also highlight a potential opportunity for
enterprising life insurers to follow POLI’s lead and hone in on a
significant market. According to POLI, 19.1 million people – 40
percent of the UK’s adult population – have a mortgage.
Of this total 11.47 million people were offered life insurance at
the time of taking out a mortgage. Of those who were offered
insurance, 3.9 million purchased the product.
Of particular significance in respect of marketing opportunity,
POLI stressed that confusion appears to be major reason for people
choosing to take out life insurance via their mortgage
provider.
Notably, 35 percent of people who bought life insurance via their
mortgage provider said they felt pressured into buying it, or
believed it was compulsory to purchase life insurance with the same
provider.
In addition, 54 percent 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.
In fact it appears clear that most insurance buyers are well aware
that they are not getting the best deal, as indicatively, only 16
percent of respondents said that they believe their mortgage
provider offered the best value on life insurance.
