MONEY SECTION

There is something deeply unpleasant about the way insurers relentlessly exploit the public’s fear of unemployment and illness by offering expensive and often worthless products.

Among the more repugnant of these apparently "must have" policies are the cunningly marketed mortgage protection plans which have enjoyed healthy business since the recession.

Like greedy lawyers chasing ambulances, insurers have queued up to offer expensive policies which ostensibly cover all or part of the mortgage should we be thrown on the scrap heap or unable to work through illness.

Now CGU Direct – the phone based arm of merged insurance giants Commercial Union and General Accident – is seeking part of the action with the launch of Protect Direct. To pull in custom, the company offers three months "free" cover.

But waiving premiums for 12 weeks is a drop in the ocean compared with the massive profits CGU will enjoy if and when gullible customers start to hand over their cash. In an economy apparently on a course for close to full employment these policies represent a very good risk for the insurer. Homeowners have a choice of insuring against accident, sickness or being out of work – cover starts from just under £4 per £100 of the monthly mortgage payment. So a homeowner repaying a £60,000 mortgage at about £400 a month will pay roughly £16 a month.

Insurers say it’s crazy not to be covered but the small print often contains pitfalls and get-outs. With standard cover the insurance does not kick in for two months – it’s more expensive to bring the waiting time down to one month. There are discounts for first-time buyers, but so what? Everyone wants to snap up first timers so they can continue to sell them superfluous financial products.

CGU Direct boasts "Cover is also available to the self-employed and contract workers ... part-time workers are also covered if they are working for more than 16 hours a week."

While attempting to make itself look like a friend to those traditionally short-changed groups, it knows it will be concentrating its marketing efforts on precisely this sector – one which expects to be grateful for any crumbs.

Read the small print very carefully.