Mortgage protection & Life Assurance scams now very common.

The Central Bank introduced a code of practice where firms are obliged to present information with sufficient clarity and prominence so that a communication or financial promotion is fair, clear and not misleading.

This means you should see prices, claims of service and guarantees of instant cover displayed on web sites in a way that is appropriate and in a way that a consumer is reasonably able to understand and is consequently able to take decisions on an informed basis.

The consumer is supposed to be protected by regulator guidance in relation to promotions that make pricing claims or that indicate a firm can reduce the premium, provide the cheapest premium or reduce a customer’s costs.

If a price or offer of instant cover is given then it the rules imply the price or instant cover should be reasonably expected to be achieved by the majority of customers who respond. This is unless they actually make it clear on their web site the proportion of those customers who are unlikely to achieve the pricing or instant cover.

However, many Irish insurance broker web sites which offer life assurance, mortgage protection and serious illness cover (sometimes called critical illness cover) flaunt the codes of practice and legislation that are there to protect the consumer against rip offs but unfortunately quite a few web sites continue to display insurance prices to the consumer in a way that can only be described as an attempt at brutal rip-off.

It is not my intention to name and shame these companies but one would hope these businesses would change their practices and if you want to do business with them then perhaps you might consider mentioning the practice you don’t like and who knows perhaps they’ll take note and improve.

There are web sites that are compliant and honest but those that are not bring discredit to the insurers they are placing business for and they discredit the insurance industry as a whole.

Here are a few tricks Irish Insurance web sites are trying to use to rip you off on your purchase of mortgage protection and life insurance:

  1. If you have a cheaper policy and they can’t beat it on price they sell you a dearer policy but to get you hooked, they offer you a one off cash incentive. You are then locked into a dearer policy than you had for the rest of the term. Calculate how much it really cost you to switch.
  2. They highlight the discounted amount you pay for your policy in a way that leads you to believe it is the actual annual premium and its going to be like that every year. You believe the discounted amount is the annual premium and you don’t realise it is only a first year offer and after that you will pay the full non discounted premium.
  3. They ask you for precise details of the cover you require and they use this information to give you an attractive ‘approximate price’ of what you can expect to pay. They then warn you not to buy online but they go on to sell your precise details to an insurance broker on their panel who then contacts you to sell you the policy.
  4. They arrange a policy for you this year then they diary a call to you next year where they have a special offer with a different insurer on a dearer policy.
  5. You ask for say a 20 year policy and they show you a really attractive low monthly premium but they don’t make it clear that the amount you pay is reviewed in future years so that the amount you pay increases.
  6. They guarantee they are the cheapest and they claim they offer complete independent advice. Some firms don’t show how they are regulated and that’s against the law.
  7. They show you a discounted annual premium, then they divide that figure by 12 to make you think you are getting a lower monthly premium than anywhere else. Some even show the discount price and divide that by 12 as if it is the real monthly premium.
  8. Some fabricate the number of insurers they are actually dealing for the product you are interested in purchasing so you think they are searching the market to obtain your quote. For example they may say they deal with 14 insurers when for mortgage protection they only deal with 5. Check their terms of business.
  9. They quote a premium that is attractive but with such strict acceptance criteria that you’ll find it very hard to get it at the price shown. While they have you they then offer you a more expensive policy.
  10. They will arrange a policy where the amount you pay is increased in later years.
  11.  They quote you an annual premium for the first year but then in year two they switch you to a dearer monthly premium.
  12.  They don’t tell you what the premium is they just show you the discounted  amount.
  13.  They offer serious illness cover but don’t disclose the definition of the illnesses covered.
  14.  One web site offers you €200 cash and €200 off your yearly premium if they can’t get you a better proice on what you are currently paying so to entice you to give up youir cheaper policy and switch insurers to a dearer policy they offer you up to €200 cash and up to €200 off your yearly premium on the new dearer policy when you switch.

Savvy consumers need to take in all the information they can and use it to their advantage. You will make a more educated decision because you know what to look for.

In reality if these firms were abiding by the Central Bank’s consumer protection code then you wouldn’t have any of this.