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Lenders &#39using brands to sell inferior cover&#39

High-street lenders have been accused of selling expensive and inferior term and critical-illness cover alongside their mortgage products.

Protection broker Lifesearch says lenders rely on their well-known brand names to sell poor value products.

Lifesearch claims products sold by lenders such as Halifax and Nationwide are more expensive than those available through IFAs. It says the products cover fewer conditions and are sold on reviewable rates.

The broker says a 25-year level term and critical-illness policy for £100,000 taken out by a 35-year-old non-smoking male through Halifax in February would cost £46.94 a month or £36.41 for a female client. The policy covers 15 conditions and has reviewable rates.

The same policy from Nationwide would cost £30.60 for men and £30.10 for women. It covers 20 conditions.

Lifesearch claims the best IFA provider, currently Prudential, charges £30.25 for men and £28.02 for women. Its product covers 28 conditions and is offered on a guaranteed basis.

Senior technical adviser Kevin Carr says: “The Halifax and Nationwide, good lenders as they are, are selling overly expensive, inferior insurance alongside mortgages. They are using the trust implicit in their brand name to take advantage of unwitting consumers.”

Nationwide Life general manager Mark Jenkins says: “Our products may be dearer than what an online execution-only broker can achieve but our products are sold with advice. We offer the products our customers want, we do not necessarily offer those that IFA customers want as that is not our market.”

The Halifax says it is aware that its protection products are not the cheapest and it is reviewing its range.


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