One layer of protection too many?

If you have recently bought a holiday, mobile phone, an electrical item or taken out a loan or a mortgage, chances are the salesperson will have tried to flog you insurance at the same time. But insurance policies 'bundled in' with a product are rarely the best deal and consumers would be well advised to shop around for insurance or not bother at all in some cases.

Travel insurance

At the moment travel agents who sell travel insurance alongside a package holiday are not regulated for insurance sales. As a result of this many travel agents have been accused of dubious selling practises including faling to ask customers whether they had any pre-existing medical conditions that might affect a claim and not explaining what the policy covers and what it doesn't.

On top of this, policies sold by travel agents are also more expensive than policies bought elsewhere for example, direct from insurers or through an online broker. Financial analyst Defaqto says that on average the cost of insurance for a single trip cost 91.8% more from travel agents compared with the most competitive insurers in the market, and 15.5% more than the market average.

Although travel agents will be regulated by the Financial Services Authority (FSA) for insurance sales from 2009, it is still unlikely the policy your travel agent offers you will be the best available. Steve Johnson, head of travel insurance at Sainsbury's Bank, says: "The only way to be sure you get the cover appropriate for all your needs at a price that's right is to shop around. If you know roughly where you plan to go and for how long, there's nothing to stop you obtaining your insurance before you step foot in the travel agent especially when considering an annual policy."

Going abroad this year? Try our Travel Insurance comparison service.

Mortgage and loan payment protection insurance

If you take out a mortgage, credit card or loan your lender is likely to try to sell you payment protection insurance (PPI) in case sickness, accident or unemployment means you are unable to work and will struggle to repay the debt. But these policies can significantly increase the cost of a loan or credit agreement and in some cases you might also end up with a policy not suitable for your circumstances.

Whether you need this insurance at all is open to debate but one thing that is for certain is that the policy your lender offers you is unlikely to be the best on the market. To get the best deal, consumers should shop around for a single policy that will cover all their loan and credit agreements in the event they lose their income. Reading the small print is vital if you are to be sure that the policy meets your requirements and will pay out when you need it to.

Looking to borrow money? Check out the most competitive unsecured loans around right here.

19 October 2007 © Moneyextra.com

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