There are obligations on banks and building societies offering current accounts that include insurance products. Find out what this means for you.
Packaged bank accounts explained
A packaged bank account is a current account that comes with other goods or services. Generally these include at least one insurance product (such as travel or mobile phone insurance), but it may also include a range of other non-insurance goods or services (such as airport lounge access). You usually have to pay a monthly fee for a packaged bank account.
The obligations of firms selling insurance products as part of a packaged bank account
Your bank or building society must take reasonable steps to check whether you would be eligible to make a claim on each insurance policy provided by your packaged bank account and to share that information with you when you are considering opening the account. They should also make you aware of the cost of your account, as well as the key features and exclusions of each insurance policy.
On an ongoing basis, they are also required to provide you with an annual eligibility statement, setting out the eligibility requirements for each of the insurance policies in the account.
What you should consider
If you are considering taking out a packaged bank account you should:
- think about whether you can afford the monthly fee
- consider whether you would use each of the benefits included in the package
- think about whether you have any existing insurance cover similar to those included in the packaged bank account. If you do, you may end up paying twice but will usually only be able to make a claim on one policy
If you do decide to take out a packaged bank account, you should review your personal circumstances at least annually when your bank or building society sends you an annual eligibility statement, and tell them if anything has changed. This is to avoid the risk that you become ineligible for one or more of the insurances if your circumstances have changed (e.g. if you develop an illness that could impact your ability to claim on travel insurance).