sumit kapoor
Talk to an expert

If I buy a life insurance through a broker, what happens when a claim is made?

Well, the answer to this question is very simple and straight forward. When a claim is made, your family would need to get in touch with the provider directly & they’d still get the lump sum they’re due to get regardless of how they’ve taken out their life cover but provided it’s been done properly & all the disclosures have been made at the time of setting it up.

Ironically & much to the surprise of many who think otherwise, going through a broker can actually save you days & weeks’ worth of time to search the right policy for you & your family besides saving you the hassle of chasing the money if/ when a claim is made. The reason for that is, brokers (advised based) or financial advisers are qualified, not only to give you the best advice as per your circumstances but their job is also to ensure that your policy is done correctly so at the time of claim, an insurance provider can’t turn it down.

The only thing you need to make sure is that the broker is regulated by the FCA i.e. they’re licensed to give advice to you.

Another thing which perhaps concerns many, is that brokers would charge them a fee or going through a broker would mean more money. This again is a myth as brokers get paid directly by the providers in case you go ahead with their advice or through them & this doesn’t affect your premiums ever. Majority of them don’t ever ask you to pay them anything. In fact some would even offer you incentives for e.g. free vouchers if you go ahead with them.

So the next time you get a call from some life insurance broker regarding your life insurance, don’t shy away from listening to what they have to say for they’re just as important in the financial market as doctors are in the health industry.

What is an ideal term on a term assurance policy?

The term of a life insurance policy is of utmost importance & if not chosen wisely can leave you regretting your decision later in life. Although it’s very subjective, I’d still suggest the longer the term the better simply because it increases the likelihood of your family getting that lump sum for which you’ve been paying the premiums religiously for years.

Having said that, there’re many different ways of designing a policy depending upon a certain budget, so for e.g. if you have a strict budget in place & you require, let’s say, at least £200k worth of cover to protect your mortgage which has another 25 years left on it & you also wish to leave behind some money for your family when you’re gone. You could consider a mortgage cover for 25 years + a smaller amount (depending upon your budget) to continue for a longer term. This would ensure the funeral expenses are dealt with + any extra bit of money could go to your loved ones. Taking out a policy worth £200k for the longest term could cost you a fortune & the truth is you may not even need that much cover for that term.

This is where an adviser comes in to the picture. Fortunately the market is still replete with qualified advisers who’d work around your requirements & circumstances to get you the best deal & that too for free.

Your only due diligence is to ensure the adviser or the broker firm you’re considering for an advice is registered with the FCA. That alone would take care of 100s of other things that you probably wouldn’t even be aware of. You see, the good news is, 1 wrong or bad advice can put them in trouble even to the extent of them being shut down as a business, so you can rest assured about getting the right advice.

Is it better to take out a joint cover instead of 2 separate policies?

Joint life insurance policies are cheaper as compared to 2 single policies but only slightly cheaper. They would pay out upon death of either of the partners & would then end. 2 single policies on the other hand would pay out twice.

So joint policies are suitable for couples with no dependants whereas if you have children whom you’d like to leave money for it’s advisable to consider 2 separate policies for they would pay out twice.

Let’s understand this with a simple example. So if Mr & Mrs Jones decided to go for a joint policy worth £100k over 20 years & they were quoted £20pm for this cover, the policy will pay out £100k should either one of them were to pass away during the term & the policy would, at that point, end. On the hand if they go for 2 separate policies worth £100k each over 20 years, the difference in price wouldn’t be much, so instead of £20pm they’d probably end up paying only about approx. about £25pm, but in terms of the sum assured, they’d have double the cover should anything happen to both of them during the term.

So if you have a tight budget & all you want is to protect each other in the event of death, a joint policy is probably your best bet, but if budget isn’t your problem & you have dependants or even grown up children, 2 separate policies are advisable.

Which company offers the best critical illness cover?

Today, all the major insurance providers in the UK offer critical illness cover but how would you find out which one is the best for you?

Well the answer is not that simple. One of the biggest insurance providers i.e. Legal & General is trusted by the majority of people in the UK when it comes to life insurance for many reasons viz. they’re one of the oldest & the most heard of insurance companies in the UK, they also happen to be one of the most competitive insurance companies around but are they really that good when it comes to critical illness cover? Think about it if you’re looking to consider a CIC.

L&G covers you for just over 40 medical conditions which means, if you ever get diagnosed with something critical that’s not on their list you’ll never get paid even if you were to stop working & were off work for over 2 years. You could end up spending almost all of your savings for perhaps private treatment or to carry on living the same lifestyle but that wouldn’t necessarily mean that they would pay you, simply because they don’t cover that condition.

The same way, some companies would cover you for 50 conditions; some for over 80 & Vitality for e.g. would cover you for 114 conditions. But does that really make Vitality the best? Think again!

Vitality offers you serious illness cover which means if you were to get diagnosed with cancer for which all other providers would pay you the full lump sum that you’re covered for Vitality would only pay you a percentage of that amount depending upon the severity of your condition.

So just because a company covers you for more conditions doesn’t make it any better than others. There’re many factors that need to be considered before you decide which route you want to take.

AND for that very reason it’s highly recommended that you take professional advice from independent advisers/brokers to ensure they tailor make the cover based upon your budget and requirements.

Do I really need a life insurance if I am single & have no liabilities?

A life insurance is predominantly for your family & loved ones & not for yourself, so the question is do we really need a life cover if we don’t have any dependants to leave any money behind for?

Well, the answer is YES. There’re many different products available in the market with each being suitable for a certain type of customer depending upon his or her personal circumstances. For e.g. someone with no dependants or no mortgage would still need some form of cover to protect his or her personal interest.

There’re 2 types of covers suited to this situation:

  1. Critical Illness cover
  2. Income Protection

Critical Illness Cover: A critical illness cover pays out a lump sum upon diagnosis of a serious/ critical illness. Although this is a comprehensive life insurance suitable for working individuals with families to look after, this type of cover is also suitable for individuals with no dependants or liabilities just to ensure they’re able to carry on living the same lifestyle till the time they’re off work due to an illness. If tomorrow you’re not able to continue working due to an illness & it could take perhaps a year or two for you to get back to work, you’ll at least have something to fall back upon. It’s most suited to people who’re self-employed for there’d be no sick pay that they could rely on, & that’s one of the reasons why majority of people tend to cover themselves for about a year or two years’ worth of salary. The money obviously can also be used in case you were to contract a disease & you decided to go for private treatment.

Income Protection: Income Protection on the other hand pays out a part of your salary month on month (depending upon your plan) in the event that you were not able to work due to an illness or even an accident making it THE most comprehensive policy in the market. This cover is by far the most important cover to consider as long as your budget allows & inasmuch as it’s suitable for individuals with families, it’s equally important for single individuals with no dependants. The best part about an income protection policy is that it pays out a monthly income to you regardless of how severe your condition is, so long as you’re medically unfit to work.

So if you’re single, have no dependants & you think you don’t need any form of cover, think again because life insurance isn’t always for your loved ones, your life is equally precious.

How do you know your life insurance cover is definitely the best value for your money?

Imagine you’ve fallen sick & after giving yourself some rest for perhaps a day or two and popping in a few OTC pills, thinking you’re going to recover on your own, what is it that you do when you fail to convalesce?

Well isn’t the answer obvious, you see a doctor? You see a doctor because you’re not a doctor yourself. It’s not your field of expertise & you wouldn’t ideally want to experiment with your health trying to diagnose your condition & then possibly ingesting just about anything you feel would help you cure.

Then WHY would you want to experiment with possibly the most important thing after your health i.e. the financial security of your loved ones. Some would in fact argue that that’s even more important as compared to their own life.

But when it comes to Life Insurance we tend to play the expert here by doing things online these days, isn’t it? Think again!! One wrong move & all that money you’d have paid all your life is gone down the drain. There’s a very good reason why we have financial advisers around else all of us would’ve done it ourselves. The reason is, we as laymen don’t understand how it all works & believe it or not we don’t even know what type of cover would best suit our circumstances or if the price we see on the comparison site is definitely the best price for that product. The fact is there’re so many different permutations & combinations when it comes to life insurance products & for the price that we’re prepared to pay, it’s a financial adviser’s job to find us the most suitable product within that budget. The best part is we don’t even need to pay them for the service.

The next question is, is there a standard operation procedure (SOP) for all financial advisers across the board to ensure the advice we’re getting from any financial adviser is going to be the best advice for us? The answer is somewhere between a simple Yes & No. They all have to follow the guidelines laid down by the sole regulating body i.e. the FCA but that said, they all have the freedom of choice between different products to choose from & because everyone has a different outlook in life similarly every adviser has a different opinion on any given situation.

Adviser A. might think a policy till age 65 is fine for you but adviser B. might not agree, he might recommend a longer term product to you which according to him is a better product. But remember it’s better only in his eyes & although both the products may be suitable to your circumstances but eventually it’s for you to decide which one you think would be a better option for you. The adviser’s job would be to make sure the policy has been done correctly & also to ensure he’s run you through all the different options available in the market. The perfect adviser should however discuss with you the pros & cons of all, without confusing you.

So the next time you’re in the market, scouting for the best insurance adviser, be sure to ask him/ her what product would they buy if they were in your shoes instead of just recommending any product to you.

A cold call regarding my Life Insurance

Ever had calls regarding your life insurance review, well I get about 10 calls about my life insurance each week with people telling me they can save me money. Although in today’s day & age majority of us want to save money, it’s obviously annoying to be getting such calls especially from different parts of the world pestering you to get your policy reviewed. Having said that, I’d like to share my recent experience with one such random cold caller which left me smiling, happy & thankful about the whole thing after all.

I had someone called Alex (I could tell it wasn’t his real name) phoned me about 10 days ago to say he was calling about my life insurance policy & I thought it was to do with my existing policy but when I realised it wasn’t & I was being cold called to be sold an insurance I got annoyed & decided to confront him. To my surprise the bloke was honest enough to tell me that they were working as brokers & their intention is only to save me money & to see if I still had a policy that was relevant to my current circumstances.

He had an Asian accent (perhaps Indian), his grammar was all over the place, his pronunciation was screwed, but there was this underlying smile in his tone which I could feel and there was also this optimism that perhaps persuaded me into going on with the call.

I decided to hear him out & went ahead with the call to answer his questions for a change. We laughed about my little kids & how they just can’t get along & it took him about 5 – 7 minutes to establish that my policy which was about 8 years old wasn’t really relevant to my current needs. I’d gone through a divorce in these 8 years, started living in with a new partner with whom I have a little kid now & I no longer have the mortgage for which the policy was originally taken out. He told me honestly that he wouldn’t be able to save me money on the existing policy I had however the policy I had didn’t match my current needs & when he told me that & asked me if I wanted him to come up with a solution i.e. a policy which would take care of everything, I acquiesced. He passed my call on to an adviser, introduced us to each other & walked out of the conversation politely after saying a bye to us.

The adviser was given all the info already so I didn’t have to repeat all of what we discussed already & he worked out something which is within my budget still & takes care of everything. I am now at peace knowing I have a policy which would ensure financial security for my family should something happen to me even after 20 years now.

I realised, my policy was running out soon & was decreasing too instead of being level & how important was it for me to change it. Perhaps I knew this all along but was too lazy to do anything about it but that one call from this stranger helped me sort things out as far as my life insurance is concerned. I thought about it later that I didn’t even get a chance to thank him. But since that time I think I’ve become a bit polite with cold callers & I know not all of them are bad.

Can you really change your life insurance policy within a year if you wanted to?

Well, the answer to this question is not really a straight forward “yes” or “no”. Let me try and explain. These days many insurance brokers push customers into signing at least a 2 years contract to prevent them for changing or cancelling their policies within that time period and should they still choose to cancel or swap it, they must pay a penalty (it’s not a set amount, every broker would charge a fee according to what they deem fit). The reason why they tend to this is because they end up losing a big chunk or all of their commission should you change or cancel your policy within the first two years. As an industry insider I can tell you it’s a pain in the back side for them bearing in mind the amount of work that goes into setting up a policy which obviously a customer wouldn’t know.

You, as a customer, can obviously say a no to signing that contract and perhaps go elsewhere for a policy, that’s entirely your prerogative. However, whether that signed agreement (if you do decide to sign it) stands a chance in the court of law is still controversial. The providers can’t certainly tie you up in any such contracts because it’s not legal, but whether or not these broker agreements are legal or carry any weight-age is still a question mark.

Obviously if you can’t afford that policy any-more due to a sudden change in circumstances, it’s unfair for any broker to penalise you & like I said under these circumstances whether or not they can penalise you is also a question mark.

In my opinion though, contract or no contract, I feel it’s only fair for you to get in touch with your own adviser, who’s perhaps put in so much efforts into finding you the policy best suited to your needs, if you had a change in your circumstances or someone offered you a better price.

Should Life Insurance be made mandatory?

What if life insurance was mandatory just like your car insurance? Sounds like another expense added to your current list of expenses, doesn’t it? Well everybody has a different way of looking at things; your viewpoint towards something could be entirely different to mine, so I’d try to talk about facts & not my personal opinions.

The Association of British Insurers (ABI) publishes average payout rate statistics from across all insurers each year for the public to see. As per the statistic last year (2016) 98.3% of all Life Insurance claims were paid, with an average payout on a Life Insurance policy being more than £75,000.

The tiny number of claims that do however get declined is because of discrepancies in disclosure. Obviously this can be avoided by being completely honest about your smoking status & medical history.

But then what does that tell you about the multi-billion pounds worth of worldwide industry. Ok, the most significant thing to notice here is the amount of successful claims each year. This is now a heavily regulated industry with foolproof & watertight compliance guidelines to ensure your financial security. It is no longer an industry brimming with unregulated companies or brokers like it used to be back in the day. So if you’re still too negative about the uncertainty of life insurance & think it’s nothing more than a fad, Think Again!!

We spend at least 10 – 20 times more, on average, to insure our cars because it’s mandatory & the biggest irony of this millennium is that most of us don’t seem to give much importance to something that’s of paramount importance, its “Life” my friends. We insure our cars but not our lives, why? I guess because we feel it’s a waste of money, isn’t it. The fact is we’re too lazy to even think about it because if you do some research you’d realise these policies cost you a lot less than you spend each month on fast food.

End of the day, buying a life insurance policy is like buying peace of mind, it definitely gives me peace of mind because I know if the worst was to happen tomorrow at least my family wouldn’t have to suffer, they’d have that financial security to help them carry on living their lives with dignity.

And remember, there’s a policy for everyone out there, whether you’re a single parent, a married man or woman with children or even if you’re single with no dependants, there’re so many products in the market these days that you’d be surprised. There’re policies that are designed to protect your lifestyle by providing you with a regular income if weren’t able to work tomorrow. So if you haven’t been thinking about it, do it now because with every passing year it’ll only ever get more expensive.

We at Assured Life, help you decide which product would be most suitable to your current circumstances & needs. Just give us a call to discuss & we’d be more than happy to help you.

Can a mortgage cover be taken out independently?

I’ve come across a lot of people lately telling me they’ve taken out a mortgage cover through their mortgage broker as its less hassle & obviously a better price as they’ve also done their mortgage. So what stimulated me really to write about this is the fact that there’s still so much ambiguity around life insurance which is a bit of a shocker to me given today’s day & age when everything is out in open. I mean all you have to do is just Google it, isn’t it.

I am not suggesting that people should invest a lot of time reading about and researching life insurance & various other protection products, but it’s definitely good to have some basic knowledge about life insurance.

Now then, different companies sometimes use different terminology when talking about life insurance. The most commonly used terms are life cover, family protection, life insurance or simply cover, when used in this context. The same way a life insurance to cover a mortgage i.e. to ensure the mortgage balance is paid should you die, can be described as a mortgage cover, mortgage protection or mortgage insurance.

The 2nd point you’ve got to bear in mind is that a life insurance can be arranged or taken out through various channels viz. banks, online, mortgage broker, life insurance broker or an independent financial adviser (IFA). So the answer to your question is “Yes” you can, if you wanted to, take out a life insurance to cover your mortgage independently.

Further, a life insurance, whether it is to cover your mortgage or not, would usually cost you lesser if you go through a life insurance broker as opposed to a mortgage broker as they’re usually more expensive. Another channel which appeals to most of us for majority of our needs is “online shopping”, but you’d be surprised to know that, by and large, life insurance brokers would be able to offer you a better price for the exact same product, now that’s a trade secret nobody would tell you about. So the next time you want to buy an insurance make sure you get in touch with an IFA or a life insurance broker firm.

Another thing that I find quite funny is that some people tend to cling to the same provider for their life insurance even though they’re getting a better price elsewhere for the exact same thing. Now the reasoning, when asked, is that they’d lose all their money if they change providers. Let me try and explain in simple words. Life insurance works exactly like your buildings & contents insurance, or even car insurance. When you take it out you don’t expect anything in return, do you. The only time it pays out is when there’s an incident, that’s exactly how life insurance works, they don’t offer endowment or cash back policies any more so the only thing that matters or should matter to you is how much you’re paying for that policy & how much cover do you have in return. With that in mind, if a company offers you a better deal, you must, by all means, grab that opportunity, without thinking twice. Be advised though that, it’s purely for life insurance & is not meant for critical illness cover which is more comprehensive & differs from company to company. With critical illness cover, your biggest concern should be the quality of cover rather the price you’re paying on it.

Finally, a life insurance is best taken out when you’re young and healthy & not when you’ve retired. A lot of people would normally start thinking about it in their 50s unless they take out a mortgage at a young age. Trouble is as you grow older, life insurance gets more expensive. Besides, the prices go up considerably the moment you turn 50. So it’s definitely something that should be set up before you’ve turned 50.