Credit cards, mortgages and home contents can give cause for concern if they are unprotected. Defaqto examines the best products for protection

Mortgage payment protection
New research from the Citizens Advice Bureau shows that, across the UK, its centres have reported a 47% increase in the number of new consumer credit debt problems over the past five years.

The survey concluded that one of the main triggers for debt problems for people on low pay was a change in circumstances, such as a period of ill health. The surveys shows how important products such as mortgage payment protection can be to customers. This month we look at those products available offering full accident, sickness and unemployment (ASU) cover with a 30-day deferral period.

Key features of the Natwest policy include:

  • Benefits calculated on a daily basis and paid retrospectively
  • No time limit on period of temporary work allowed during periods of unemployment
  • Covers customers who work away in Europe
  • No exclusions for mental illness, stress or backache
  • Inclusion of £20,000 personal accident death benefit as standard
  • Cost is £5.12 per £100 of mortgage repayment protected.

    Area where it lags behind other providers in the market:

  • Benefit insured can be extended to cover insurance premiums, but not other costs.

    Home contents policies
    With summer almost here and the subsequent activity in and around the garden, it is wise to assess the often overlooked cover household policies provide to address the increased risk. Thieves undoubtedly look to exploit the easy target, and high value property in outbuildings - and the garden is just that. Defaqto has looked at a range of contents policies across all distribution channels to assess the varying levels of cover available.

    The analysis shows Marks & Spencers (M&S) Home and Contents Premier product is ahead of the competition, with market leading levels of cover across most of the features chosen.

    Key features of the M&S product include:

  • No limit on the total for pedal cycles in the home
  • No limit on contents in the open
  • No limit on contents in outbuildings including loss due to theft
  • Student belongings covered within the contents sum insured
  • No excess for contents claims.

    Drawbacks include:

  • No cover for plants in the garden.

    Credit card repayment protection
    With summer holidays fast approaching, and very attractive 0% offers on credit cards many people will be tempted to put their purchases on plastic and pay off the debt during the rest of the year.

    This month we looked at the protection provided by credit cards in the event customers become unemployed or sick, after spending on their summer purchases.

    Since the last time Defaqto carried out the analysis of credit card protection there has been little change at the top. Of the 50 products analysed, Co-op Visa, Marks & Spencer and Sainsbury's Bank are clear leaders.

    Key features of the Marks & Spencer storecard policy include:

  • Benefits payable after 15 days of disability, or 29 days of unemployment
  • Monthly benefit is 15% of the reducing outstanding balance, calculated on a monthly basis and paid retrospectively
  • Any outstanding balance at the start of the illness or unemployment will be completely cleared in the event of an extended period away from work
  • No initial exclusion periods for either unemployment or disability claims
  • No exclusions for mental illness, stress or backache
  • Cost is 67p per £100 of cover.

    Areas where the card lags behind some of the others include:

  • 29-day deferral period for unemployment claims - Co-op visa is just 14 days
  • Benefits accrue on a monthly basis - those for Co-op accrue on a daily basis

    NOTES

  • These charts use Defaqto's unique Data Numerical Analysis (DNA) scoring system
  • DNA illustrates the relative positioning of a product based on selected criteria
  • The criteria used in this chart are a representative sample only and may not be relevant in all cases
  • Other criteria are available and may give different results
  • When used to match products to a client's circumstances, DNA can show how closely a product matches those requirements.

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