The Post Office has branched out into the life insurance and broadband markets with two new product launches.
But while both seem like great value at first glance, neither product delivers what you were hoping for (so at least the Post Office is sticking to its core business strategy).
The life insurance offering is the headline-grabber, promising customers £100 cash back for signing up, while the “unlimited” broadband is going for just over £20 a month.
Now let’s take a peak underneath the advertising fluff and see what hideous nasties lie beneath.
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Product 1: Life insurance
No doubt many people will be tempted with the idea of getting £100 back from their insurer, as it significantly reduces the short term cost of your policy.
But of course most cover ranges anywhere from 10 to 25 years, meaning those early savings will count for nothing if your year-on-year premiums aren’t competitive.
So how does the Post Office add up? We applied for £300,000 cover over 20 years for a 40 year old, non-smoking male, and were quoted a monthly premium of £33.53. We then applied for the same policy at both Sainsbury’s and Legal & General, which quoted us £31.07 and £30.22 respectively.
The difference of just over £3 between the cheapest and most expensive may not sound like much, but it adds up over time.
| Provider | Monthly Premium | Annual cost | Ten year cost | After 20 years |
| Post Office | £33.53 | £302.36 | £3,923.60 | £7,947.20 |
| Sainsbury's | £31.07 | £372.84 | £3,728.40 | £7,456.80 |
| L&G | £30.22 | £362.64 | £3,626.40 | £7,252.80 |
Quote for level term life insurance for a 40 year old non-smoking male. Premiums based on a sum assured of £300,000 over 20 years.
Keep an eye on the long term game
As expected, the Post Office policy is by far the cheapest after year one, thanks to that £100 cash back. But jump forward ten years and we see that the less competitive premiums are taking their toll, with the Post Office policy now £195 more expensive than Sainsbury's and £297 more than L&G's.
By the time the policy expires, those marginally pricier premiums have rendered the Post Office cover nearly £700 more expensive – even after you factor in the cash back savings.
As with all insurance products, the most important factor isn’t how much you can save up front, but how much you will have paid out come the final whistle.
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And then there’s the fine print
What makes the Post Office policy even poorer value is the fact that not everyone who applies will be eligible for the cash back offer.
According to the fine print, your premiums must cost at least £10 a month in order to qualify. This is especially significant for younger applicants, who are usually given far cheaper premiums.
As an example, a 30-year old male looking for £150,000 level term cover over 15 years would cost £9.19 a month.
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Product 2: Broadband
According to the Post Office, you can get an 8mbps line for £20.95 a month, which allows “unlimited downloads”. But take a look at the fine print and you’ll notice that monthly downloads are actually limited to just 40GB.
All broadband companies have a fair usage policy which limits excessive downloads, but this is the lowest “unlimited” package we have yet come across – you can purchase a capped service from Namesco that allows you to download 60GB a month!
Worse, the Post Office product isn’t even that cheap - a quick search on a price comparison site found five separate providers that offered more competitive deals.
On the up side, it offers 24 hour UK support and provides a free wireless router, so it’s up to you to decide whether these make up for the aforementioned flaws.
Click here to compare broadband deals
Follow the postal worker’s lead
In the Post Office’s defence, both the insurance and broadband markets are extremely competitive, meaning it would have had to come up with some stupendous offers to become instant market leaders.
Instead it has brought out products that are decidedly mid-table, and that simply isn’t good enough. So for customers looking for the best deal, why not follow the example of you local postal worker and stay away from the Post Office until they’re willing to offer a better deal.
