Packaged bank accounts (where people pay a monthly fee and receive a package of benefits such as travel insurance, mobile phone insurance, and a lost keys service), were all the rage a few years ago. But last year they hit the headlines with claims that many people had been mis-sold these accounts, paying for services they didn’t need, or that they didn’t even qualify for.
Despite this, they remain popular – especially with people who feel they are saving money by not having to buy things like travel insurance. The reality is that many of these people would actually be better off buying their travel insurance separately and ditching their packaged bank account altogether - especially if they’re not using the other benefits within the package, or if they have medical conditions that aren’t covered by the standard policy.
We recently had a client who discovered the travel insurance she received through her bank account didn’t cover her pre-existing medical conditions, which is so often the case. When she asked them to add these conditions to her policy, they quoted her an eye-watering £100 extra. She decided to shop around and, using PayingTooMuch.com, found a much cheaper policy with full cover for only £21 a year.
Our client was lucky that she had checked her policy conditions before she travelled, but many people don’t, and receive a rude awakening when they come to claim and find out they’re not covered.
Things to be aware of with insurance through your bank account
- The terms and conditions may not cover certain pre-existing medical conditions, so please check before you travel.
- They may have an age restriction for cover – typically 70 years old - whereas other policies will insure you up to age 99 years.
- The cost of the account may be more than the cost of the benefits individually – especially if you don’t use them all. It’s easy to get an idea of how much the individual insurance benefits would cost by giving a company like PayingTooMuch.com a call, or running a quick online quote.
- There may be other exclusions such as ‘dangerous sports’ e.g. skiing, or diving. If you are planning to do some extreme activities while you are away, check you are covered.
- You may have to activate your insurance before it covers you, so make sure you call the insurer before you go.
Michael Ward, Managing Director of PayingTooMuch.com said “Packaged bank accounts can offer a brilliant way of saving money for people who use all of the benefits, and don’t need specialised cover. As with any insurance policy, we recommend you carefully check the terms and conditions, and also make sure you’re not paying over the odds for what you are getting. A monthly fee of £10 to £15 may not sound much, but when you add it up over a year, you can end up paying an awful lot more than you might have paid for the benefits you’ve used.”