Life Insurance Cover – ABC

AIG is apparently well into recovery mode.

American International Group Inc., the troubled financial firm that threatened to bring down the U.S. economy, is showing stable revenue for its insurance units and improving its ability to repay taxpayers 17 months after a bailout that swelled to $182.3 billion.

An UK insurance industry tax contribution are claimed to be robust according to the industry body

The ABI has published a research paper on the contribution of the insurance industry to UK tax revenues, and how the UK tax system impacts insurance companies.

Summary
During the “Credit Crunch” Protection Insurance has been a useful product, will it become more popular? The right moves are at last being made by the insurance market. We hope they will be successful. This article gives you the facts.

Not manyexpert financial advisers would disagree that protection insurance should be the basis of most peoples financial planning whether it be guarding against the damage of early death, accident, long term illness or (particularly now with the arrival of the credit crunch), cover for unemployment.

Life assurance is rightly the bed rock of financial planning whether it be put in place to protect your home owner loan or supply a tax free lump sum for your loved ones in the event of your death. Regrettably, some other brands of protection insurance have a less enviable reputation. Payment Protection Insurance Cover has a reputation for being miss-sold and critical illness cover has formally suffered from extensive policy exclusions which allowed the insurers to refuse a huge amount of claims, even if they seem valid.

But last month a shimmer of light emerged when Norwich Union gave out its 1st 1/2 figures on the resulteffect of claims on its critical illness cover. These figures appear to imply that at last the problem of inadvertent disclosure of health particulars when the policy application is completed, is being resolved.

A little while ago critical illness insurance claims were being repeatedly refused on the merest suggestion that the client had omitted any slight medical detail – even a foot infection or a sore throat! According to the figures presented by Legal and General, their claim refusals have come down sharply from 6.5% the previous year to 1.6 per cent in the last six months.

How did this come about? LV, Scottish Equitable, Norwich Union, Scottish Provident, Axa, and Friends Provident  have launched a range of changes intended to diminish their refusal rates. They start off with an absolutely clear explanation of the importance of complete health disclosure right down to when they last visited their Doctor no matter how minor the reason. And some life insurance quotes such as Axa get a medically trained person to phone each applicant to discuss their medical history in more detail. Then when the insurance policy goes on risk, some insurers are telling again the insurance holders of the importance of full health revelation and giving them the opportunity of correcting or adding the details on their application form.

If the additional details are assessed as increasing the insurer’s risk, then the cheapest life cover insurance company will certainlywithout doubt put up the monthly payment – but that’s definitely far better than paying the original payment for years and then getting a claim refused.

The insurance companies should have taken action years ago as their slowcoach approach has dented the people’s perception of protection insurance. Nonetheless there is an definite need for protection insurance so let us pray that it achieves the status its so correctly justifies.

Summary
The benefits offered by life insurance cover are compared with the benefits of critical illness cover. The arguments for taking out critical illness insurance cover.

Think about this scenario ‘Could you afford to pay your monthly financial commitments if illness prevented you from working?’ Most of us would say ‘No’. So evidently we need to think about taking out insurance against the worst happening. A typical critical illness policy would pay out a tax free lump sum if the insurance policy holder is diagnosed with a potentially critical illness. The lump sum can be used in a number of  ways. For example, it could be protection for you home so that you could pay off your mortgage, make alterations to your home to accommodate a wheelchair, or simply settle your bills.

The next few months will see a sharp rise in premiums, so if you haven’t got any insurance cover at the moment, now is the time to get life insurance quotes.

The cost of life insurance has has lowered over the past 15 years. There are several reasons why this has occurred.

To start with the Aids epidemic, that was expected in 1980-1987 never materialised and secondly the recovery rate of those suffering from heart attacks and cancer has vastly improved. These issues have made it possible for insurers. Protection insurance is frequently re-evaluated by insurers, when the amount of claims for certain conditions are examined. Following such a review Legal and General will be amending premiums soon, with the price of life insurance cover decreasing slightly and the payments for critical illness insurance cover rising. The insurer is powerless to say by how much, as the client’s situation and the amount insured for differ from customer to customer, but the rise should not be huge is forecasting that there could be increase of between thirty two and 50 per cent in critical illness cover premiums in the near future. It also suspects that guaranted premiums may either become unaffordable for many, or even cease to exist due to the unstable marketplace.

Swiss Re has declared that it is refusing to underwrite critical illness insurance policies from the end of December as the policies are costing them too much.

The cost of insurance has been put up by two of the big high street insurance companies.  A twenty to twenty five per cent risehas recently been broadcast by Scottish Equitable and Prudential. Nevertheless this is very little compared to the staggering price increases written into the policies now available from Standard Health Care and PPP, which fluctuate between forty to fifty per cent.

It is presumed that this development will be followed by other re-insurers. Guaranteed premiums where the monthly payment is held for a specific period, normally ten years, may no more be offered by insurersInsurance Companies.  In future, premiumswill be re-assessed each year, just like motor and home insurance. The outlay for the customer will be far greater in the long term. The message is clear. Critical illness cover is becoming more costly so purchase it now to benefit from fixed premiums and the comparatively low rates being givenat the moment. Let us hope that you never need it, but statistics indicate that a very high proportion of us will.

To find those ellusive cheap life insurance quotations, there can be nothing better than to stay online and google for “cheap life insurance”.

Summary
It is always sensible to know just what you are looking for in the way of insurance cover as only you understand your own position.  We highlight what you need to be aware of and how to maintain it after you have it.

Ian Marsh, a Director of investments at Lancaster-based financial adviser Peel Townsend Financial Services, cautions that it is very shortsighted of people not to have Life Assurance and/or Critical Illness Cover as he maintains that life has two main hazards – either living too long and passing away too soon.  “Its absolutely vital to have some insurance cover in place – especially if you have got small childern,” he says. “These days you must  asemble your own little fortress because nobody else is going to do it for you.”

Greg Suttcliffe at Bestdeal says now is the ideal time to invest in such plans as there are some very competitive premiums around owing to the intense vying for business within the insurance market. “The cost of life cover has dropped – reduced by about 42% in four years. It has never been as cheap,” he says. “The critical illness insurance market paid out on eighty four per cent of claims in 2007 – rising from seventy nine per cent  the during the last year.”
Always check what insurances you already have before you take out any more.  Do you already have investment policies or does your works pension fund give you any other cover?

The best way to assess how much insurance you need is to calculate how much you would want to retain the same level of living over a year and then multiply it by 24 years.  The minimum amount needed should settle all debts and and leave a lump sum for your family.

Obtaining the best deal

When making a decision on your insurance cover it is very necessary to read the manual that many insurance companies have of the illnesses and conditions that they cover. It will catalog everything and should be clear-cut and simple to comprehend.  You will also want to look at the documentation of the crutial features of the policy which will incorporate all exclusions and benefits.

When a person takes on the responsibility of a home loan they are normally counselled to take out critical illness insurance but should look around and not just take the first insurance policy offered.

If you commence paying these premiums when you are younger they are considerably cheaper, very different to leaving it until you are older, when the policy increases quite markedly.

Cheap Life Insurance premiums can also be lowered by stopping smoking cigarettes.  Fiona Jackson, head of protection insurance at AxA Insurance says “Giving up smoking can save people a significant amount of money as well as hopefully bringing a longer and better quality of life.”

If you quit smoking cigarettes you can take off as much as a 1 3rd off life, critical illness  insurance and income protection insurance premiums because the facts that we now have proves that smoking can cause serious illness and aggravates any other existing medical conditions.

If your circumstances change you may have to alter your policy.

Never think that once you have bought your insurance policy that you can just continue with your life and think no more of it. constantly be very aware of the insurance cover you have and be sure that, should your situation change, or, are going to alter your insurance must have capacity for these revisions.  Clear examples are changing jobs, or do you intend to have more children; often think about everything that may escalate your living costs and will need to to be covered if you are taken ill and cannot work.

Summary
The choice offered by protection insurance menus and the firms who are leaders in this type of insurance. This story explains how the client can profit 

Protection Insurance options which give customers the chance to pick ‘n mixlife and health insurance cover in an all in policy have been obtainable for over twenty years. Sadly the initial insurance policies did not prove to be very attractive to clients although the concept was right. A single set of paperwork, direct debit and administrative savings were accepted by both insurance companies and the consumer. On the other hand the benefits given by these menus were exceeded by the shortcomings.

The choice of products offered by the key pioneers, Friends Provident, weren’t competitive.  IFAs shopped around top insurers to form protective deals for the clients, which notably reduced the premiums found in protection menus. The market has now moved ahead and a large amount of new protection policies have been released which have achieved the approvalof of most of the intermediaries.

Scottish Provident was the 1st to develop a winning blueprint when it reintroduced it’s Self Assurance menu. They were soon followed by Friends Provident, Skandia Life, Liverpool Victoria Life, Scottish Equitable Protect, Legal and General and others are sure to shadow their lead quickly.

Three key details are to be found in the majority of protection menus. Critical illness insurance cover quotes a number of stated critical conditions for which it would pay out a lump sum. The least expensive option, term assurance, pays out a lump sum if you depart this life within a given period and nothing from then on. The final one is income insurance, which gives you a regular income if long term disability or illness stops you from working. The menu may give you redundancy cover, which is usually limited to one or two years and might also be restricted to the pay out of a mortgage. The major attraction is the flexibility of the policies. For example numerous levels of insurance cover can be arranged for separate sections, so so if you need to make a claim on one part the other parts will still stay in force. No supplementary health information will be required prior to major living events, like moving house, having a baby or becoming married. These further benefits are called ‘Guaranteed Insurability Options’.

Different elements of insurance may be included after the close of a short questionnaire and you will still get benefit from the typical policy discounts.

A case of the benefits resulting from a protection option is demonstrated by a young couple who went for Aviva’s Protection Choices menu for mortgage protection insurance. They are paying a jointly held policy of 31 pounds and 7 pence a month for separate critical illnesses and life cover , which have been done on a joint life basis. At the start they have insurance of £112,750 which reduces as their 24 year homeowner loan is paid off. Life cover would be paid out if one of them departs this life and the policy is terminated, but the one surviving will still benefit from critical illness insurance Life cover will be upheld for both of themeven if one of them became ill and the policy will settle on first to die.

If the husband and wife had bought a standard joint life insurance policy with Legal and General they would only receive a pay out on their 1st claim. However with their Protection Choices policy they are given 2 possible settlements costing only six pounds more. Even though employees are sometimes offered income protection with their job they may also wish to cover their home loan in a similar way. Plus they may want to take out additional critical illnessinsurance and life cover not tied to their mortgage. Aviva’s  protection options allows them to do this in a cost effective and straightforward way. The new options based insurance policies allow you to save money although you can research around for single policies and only save pence.

If you have a family history of ill-health or if you dink heavilyor are a heavy smoker you might be under the impression that critical illness cover or life insurance cover may be incredibly expensive. Marketing manager at Scottish Equitable Protect, Mr O, says this isn’t alwaysthe case, “Mostof thoseeating ‘too much’,excessive drinking or heavy smoking may wellhide from protection for fear of being incorrectly penalised for their awfulhabits. Hence, they will most likely find that these importantforms of financial protection cost even less than they think.”

Mr Y a specialist re-insurer, says only twenty per cent of the working population have life insurance protection and only 11  per cent havecritical illness insurance, even though it is generally accepted that if you are working and/or have a mortgage and dependants, this  assurance is crucial. Vast amounts of people are taking unnecessary risks.
If a person were to die unexpectedly their life insurance policy will pay out on their death and with any luck will be enough to repay the mortgage, and/or provide any family with financial security.  In the case of CICit pays out and helps at this time.  Even though medicine is progressing all the time and people are getting better from life-threatening illness, they are often unable to work temporarily or are forced  to give up completely; this is when a tax-free cash lump sum can create the financial security needed.

If a person does drink or smoke insurance payments will be higher but they do vary a lot between one insurer and another. And  they also vary between critical illness cover and life cover. FriendsProvident doesn’t raise premiums until an intervidual is drinking the equivalent of four to five pints daily.  For a non-smoking 34yr old, consuming less than 9 units per day, for 100,000 pounds of life insurance cover, the standard rate is 18.10 pounds per month.  If you consume between 40 and 60 units weekly it increases to 28 pounds per month.

In relation, it will cost a 26 yr old non-smoker 18.70 pounds per month for 100,000 pounds of critical illness cover . For a smoker this goes up to 32.60 pounds monthly, but the premium only increases again if you smoke over 40 a day.

**A family history of conditions such heart disease or diabetes does not mean that premiums will be significantly higher.  A 36 yr old physiotherapist, Mr L, comes from a family that has a lot of members suffering from diabetes although his grandparents and his parents do not. A few months ago, he and his wife took out life insurance and critical illness cover with Axa from  Scottish Equitable Protect, supplying them with a cover of 125,000 pounds.  Their monthly premium costs 39.50 pounds and Mr L was quite amazed that his families medical history did not affect what they pay.

A manager of LifeSearch,  Mr X, says if you can’t afford to do both, it is sensible to cover your mortgage with life insurance and then take out as much CIC as is affordable.

 ”Any one who can afford it should have critial illness insurance,” he says. “If you’ve got children you should have life insurance and critical illness cover. The only people who may not need critical illness are those with excellent, not just standard, employee benefits.”