Have you ever worked out how much you spend on insurance? Try totting up your premiums – we suspect you’ll be surprised! You’ll be even more surprised to discover that there’s a probability that you’ve also duplicated some of the cover you’re paying for. Cut the duplication out and you’re certain to save money.
Lots of people have insurance cover for legal expenses, loss of income, theft, even death, without even realizing it. This can arise because many of us don’t fully understand what’s covered by the policies we have, especially if the policies had been arranged for us by financial advisers and brokers.
In a recent survey, The Financial Services Authority (FSA) discovered that optional extras such as breakdown recovery and legal expense cover, were frequently added to car insurance without checking whether the policyholder was already covered. It’s also not uncommon to find that people with Permanent Medical Insurance have duplicated their cover via payment protection policies taken out specifically to cover their monthly payments on mortgages, loans and credit cards. The point is that if they claim on their Permanent Medical Insurance, their payout will be reduced because part of their claim is also insured through their payment protection policies – so their payment protection insurance is really a waste of money.
The Financial Ombudsman has confirmed this saying, “People often contact us when they find themselves over-insured. They often do not realise until they make a claim that they have been paying for a policy that provides very little, if any, benefit”.
There’s also ample of evidence that some of us simply don’t understand what we’re actually insured for! For example, take the case of Amanda Lariviere from West Yorkshire. Amanda, aged 42 and mother of two, is recovering from ovarian cancer and had an allergic reaction to chemotherapy which kept her off work. Out of the blue she received an unwelcome tax bill so she decided to visit her building society to find out if she could raise some cash by re-mortgaging. The adviser at the Society wisely asked her to bring with her, her life insurance policies so that they could be used to support her re-mortgage application. So imagine Amanda’s surprise and delight when the adviser explained that her policies with Norwich Union and Scottish Provident, which had been costing her £80 per month, were not life insurance policies at all – they were actually critical illness policies with a combined insured value of £100,000. She was able to claim on these policies and the £100,000 she received was sufficient to pay off most of her mortgage and her tax bill!
Here’s some typical insurance policies to check out.
Critical Illness Insurance
Critical Illness insurance is often sold as an optional extra within a life insurance policy. In fact that’s usually the cheapest way to buy it. However, some enlightened employers already provide critical illness insurance as part of their employment package. Ask your employer if you are one of the lucky ones!
Some employers also provide life insurance cover within their pension schemes. It’s called death-in-service benefit and typically pays out a tax-free lump sum worth 3 to 4 times the annual salary if the employee were to die whilst employed by the company.
Permanent Medical Insurance and Payment Protection Insurance
Permanent Medical Insurance (PMI) is also known by some people as Income Protection Insurance. PMI pays out the insured monthly sum if the policyholder is off work due to illness due to one of a wide range of specified illnesses – and some policies will even pay out during redundancy. PMI policies pay out indefinitely or at least until the policy comes to the end of its insured term.
Few appreciate is that PMI actually eliminates the need for Payment Protection insurance – the sort of insurance frequently sold alongside loans, credit cards and mortgages to maintain monthly payments if you are off sick, have an accident or are made redundant. Indeed, you can’t make a claim against more than one policy for the same event – only one policy will agree to pay out! (All the others will reduce their payouts to the value of the money you are receiving from your other policies)
Mobile Phone Insurance Normally mobile phone policies have a hefty excess – rarely less than £50. You could be better saving the insurance and changing to a pay-as-you-go plan.Cheap Medical Insurance, Health Insurance, insurance, Low Cost Health Insurance, Medical Insurance
Legal Expense Insurance
Insurance for legal expenses relating to disputes concerning your home will usually be included free of charge within your home and contents insurance policy. Most car insurance policies provide legal expense cover as an optional extra – others even include it as standard. Some trade unions and professional associations sometimes include access to legal advice as part of their service to their members. Check these out before you pay for more cover!
Insurance for ID Theft According to “Which”, the consumer magazine, you are only legally responsible for the first £50 if your identity is stolen. Is it worth insuring for a £50 risk? Incidentally, my bank has just given me this insurance for free!
Automatic cover for credit card purchases Many credit cards automatically insure your purchases for a set period of time after you’ve shopped. Barclaycard is a good example. If you used Barclaycard to buy something valued between £50 and £2,000, you’re insured against theft and accidental damage for the next 60 days.
Insurance provides a way you can protect yourself against unpredictable risks, and therefore it can be very beneficial to you. Accidents, injuries, and old age can deprive you of physical health. Also natural disasters, robberies, or a whole host of different things can cause you to lose your possessions.
Nobody wants to think that unexpected things will happen, but sometimes they do. Insurance is an easy way of protecting yourself against financial losses caused by these problems. With good, comprehensive insurance, you don’t have to worry about the unexpected financial burdens that may be caused by these things.
If you’re just starting to think about insurance coverage, it can all seem a little confusing. There are so many different types of insurance available, and an even bigger variety in the types of policies you can get. The biggest challenge in finding the right insurance policy can be in figuring out what you really need.
A few types of insurance are required by law – if you own a car, for example, the law requires you to have auto insurance. One reason this is important is because if you cause an accident, you are liable for the injury and property damage of other people involved in the accident.
Many other types of insurance, such as life, renters, and travel insurance, are optional. Two common types of insurance are health insurance and home insurance.
Shopping around for insurance is much the same as any other type of shopping. You can compare products and prices, and look at the types of benefits you’re getting for your money. There are a few important things to consider when you’re shopping around for insurance coverage.
First, it’s good to consider whether or not the insurance policy meets your needs. What risks, items, and events does it cover? How much will be paid out if you make a claim – will it be the full cost of the item, or will you get less money as the item depreciates? What isn’t included in the policy? For example, if you insure your home contents, are you covered if you leave the house unlocked?
A second thing to consider is cost – what can you afford, and what will you get for your money? Will you save money with a direct debit payment? Will it cost more to pay monthly than if you pay yearly? Is your premium cost fixed, or is it subject to change?
It’s also very important to look at the flexibility of your policy. What happens if you miss a payment? Does coverage stop immediately, or will you have a “grace” period to give you time to make the payment? Will you receive any money back if you cancel the insurance policy? Ameriplan Consumer Protection Starts With Phone
Also, if you switch to a new insurer, will you lose coverage for existing problems? This last question is particularly important if you’re considering health insurance, as companies will charge higher premiums if you have an existing health problem.
Finally, remember to review your policy each time you renew it. This can be a very important point since it’s important that your insurance policy continues to meet your needs for as long as you have it.
For more information, see <a href=”http://www.Make-Getting-Insurance-Easy.com”>Make-Getting-Insurance-Easy.com</a>
Insurance – Promise Of Reimbursement
The word insurance, on a broader sense means ‘Promise of reimbursement in the case of loss; paid to people or companies so concerned about hazards that they have made prepayments in the form of premium to an insurance company’.
In principles, insurance dwells on assumptions such as
1.The losses and consequences are uncertain
2.Rates of losses are fairly quantifiable and predictable
3.Losses are not calamitous
4.Losses are substantial
This unambiguously infers that speculative risks such as those involved in stock investments and gambling are not covered.
Very broadly, insurance can be said to be having two categories; one: Life Insurance and two: Non Life Insurance.
Life insurance is generally meant to be covering the risk of ‘life insured’s’ life for a predetermined sum, which is called the ‘sum assured’ to be paid either upon death occurring within the term of the insurance or upon expiry of the term itself. As a matter of fact, most of the life insurance policies are based and developed on this premise.
Non Life Insurance
The instrument non life insurance refers to insurance policy for anything other than life insurance. However, the principles are pretty much the same and sum assured and premium values are estimated in the similar way. Nevertheless, there exist two major differences between life insurance and non life insurance. They are:
1. The premiums payments are calculated on the basis of depreciating value of the insured property, each time. This invariably means that premiums get increased every time to cover up for the depreciation in the value of insured property.
2. The premiums paid over the period of the insurance are generally not guaranteed to be accumulated for payback at the end of the term unless otherwise explicitly expressed in the policy document.
A Few Non Life Insurances
Take a few examples for non life insurances here.
1.Unemployment insurance against job loss
2.Celebrity insurance against their intangible assets (teeth, legs etc.)
3.Health and dental insurance
4.Employees group insurance by their employers
5.Vehicle, house owners’, machineries insurance
6.Insurance for goods in shipment
Why Life Insurance
This is especially important to understand as many people tend to disregard insurance as something not of high importance. But in reality, insurance always covers your dependents when you are no more. It indemnifies your kin from your liabilities, such as, particularly, home loans. As a matter of fact, wiser step would be, higher the liability, greater is your insurance cover. Insurance are also instruments of tax deductible investments.
No matter the insurance companies are making huge profits, they are covering your life which is all the more important.
Insurance – All The Basics
What is insurance?
Insurance is a means of providing protection against financial loss in a great variety of situations. It is a contract in which one party agrees to pay for another party’s financial loss resulting from a specified event.
Insurance works on the principal of sharing losses. If you wish to be insured, against any type of loss, agree to make regular payments, called premiums, to an insurance company. In return, the company gives you a contract, the insurance policy. The company promises to pay a certain sum of money for the type of loss stated in the policy.
Insurance is thousands of years old. The Code of Hammurabi, a collection of Babylonian laws of 1700BC, is believed to be the first form of credit insurance. A borrower did not have to repay a loan if personal misfortune made it impossible to do so. Insurance as we know it today can be traced to the Great Fire of London in 1666, which devoured 13,200 houses. In the aftermath of this disaster, Nicholas Barbon opened an office to insure buildings.
Types of Insurance
Insurance generally covers situations involving pure risk – that is, situations in which only losses can occur. Such situations include fire, floods and accidents. People also buy insurance to cover unusual types of financial losses like, a dancer might insure her legs against injury. There are mainly three types of insurance policies sold:
1. Life Insurance
A life insurance policy provides that the insurance company will pay a certain amount when the person dies. This may be paid in a lump sum or in installments to the beneficiary [people named by the policyholder to receive the death benefit]. Some types of life insurance policies also enable policyholders to save money. Such policies have a cash value. A policyholder may borrow money against the cash value or surrender the policy for its cash value.
These are savings plans sold by insurance companies to provide a fixed and regular retirement income. If the annuitant [owner of the annuity] dies before receiving the guaranteed number of payments, the insurance company must continue the payments to the beneficiary.
Some insurance policies refund part of the premiums in the form of dividends. Such policies are called participating policies. An insurance company pays dividends if the money it collected in premiums exceeds the amount needed to pay benefits and administrative costs. Dividends may also include a share of the profits the company earned on investments made with premium funds. Dividends are most commonly paid on life insurance.
2. Private Health Insurance
Health insurance pays all or part of the cost of hospitalization, surgery, laboratory tests, medicines, and other medical care. The rising cost of medical care has increased the need for adequate health insurance. You could suffer a major financial hardship without such coverage, especially in case of a serious illness or accident.
Dental insurance is one of the fastest-growing types of health insurance. It helps pay for a wide variety of dental services.
3. Property & Liability Insurance
Individuals and businesses buy property and liability insurance to protect their assets against financial loss. Property insurance provides direct compensation if a policyholder’s possessions are damaged, destroyed, or lost as a result of perils. Liability insurance protects individuals and businesses against possible financial losses if their actions result in bodily injury to others or in harm to property owned by others.
The main types of individual coverage are:
• Homeowners Insurance
This provides protection against losses from damages to an owner’s home and its contents.
• Automobile Insurance
This is the most widely purchased and most important kinds of insurance. Drivers are legally responsible for any costs arising from accidents they cause. This insurance protects a policyholder against financial losses from accidents.
Financial viability of Insurance Companies
Financial stability and strength of the insurance company should be a major consideration when purchasing an insurance contract. An insurance premium paid currently provides coverage for losses that might arise many years in the future. For that reason, the viability of the insurance carrier is very important. In recent years, a number of insurance companies have become insolvent, leaving their policyholders with no coverage (or coverage only from a government-backed insurance pool with less attractive payouts for losses).
How Insurance Is Sold
Most insurance companies sell policies through agents. Exclusive agents are employees of an insurance company who sell only that company’s policies. Independent agents sell policies for several companies.
Insurance, Fear Of The Unknown
Copyright 2006 Karl Stadler
Now why in the world do we need insurance?
Back in the good old days when the earth was still flat and we were all living in the same time zone you would have had little knowledge of insurance except for maybe leaving something as insurance for a loan you made. There is nothing wrong with the concept of insurance, it most certainly has its value in the bigger picture of things.
What is wrong is the way in which many people are bulldozed into signing for insurance policies that they don’t really need or which will not be able to tend their needs once they need it.
As there are many first-class insurance companies out there, there are also the few that are just out to make a quick buck from you creating never ending problems.
Many people spend a large portion of their income on insurance, health, car, household and life to name but a few. There are many others policies that the insurance companies have invented to tend for other events that might occur.
All insurance is hedged against a bet. Unmistakably based on our inherent fear, which is also the sales mechanism for selling insurance.
There is always a fear of the unknown, there where you have not been and for that matter don’t want to go to either. The insurance agent will take you there and explain what it is like and make the fear almost unbearable.
Picture this scenario, you and your wife are sitting in the dining room and directly opposite you is the insurance agent. He is sitting forward and telling you the story of this unfortunate family who failed to take out insurance the day he was there and before they could sign the contracts the unthinkable happened, and now they are stranded with nowhere to go.
You don’t want this to happen to you. This is followed by one or two stories of people, and there are pictures to prove this, who did take out insurance in the nick of time. Your heart goes out to that poor family who now face hardship and turmoil and you are glad for the other families who are now able to make it and move on.
The picture painted in your mind plays with your fear of not knowing what will happen tomorrow and you certainly don’t want something like that happening to you without being prepared.
The agent explains all the benefits you will have if you take out this policy now, and in light of what you have just heard and witnessed with pictures, it not only seems like a good idea, it is an absolute necessity.
The insurance agent then looks at you and your wife waiting for an answer, he does not speak and there is an odd silence. You ask about one or two points, he explains each one perfectly and asks if you have any further questions. You answer no, simply because you actually don’t know any better. He hands you the contract and a pen.
This is nothing more than pure sales, the pitch, overcoming objections and closing the sale.
Yes you can cancel the contract later but this process will probably end up taking an entire day of your time and endless irritation.
The strange thing though is that you are the one betting that something will happen to you, you believe it. The insurance company on the other hand are betting that it will not happen.
This is quite logical if you think of it, how otherwise would the insurance company make a profit? Whether you believe it or not, they are in business to make a profit, as is any other business. So there is nothing wrong with it.
Where you need to be careful however is buying your insurance with emotion. Now this is a contradiction in terms because all purchases are made based on emotion, you might think there is logic involved, but it is a very tiny percentage.
Never sign immediately, take a day or so to review and let your emotions settle, then make the final decision. Also give yourself time to go through the written material, the fine print, very fine print and very very fine print.
It is a major pain in the you know where, but it will give you a good indication of what you will not be getting. Speak to the agent again and clarify all the points you are uncomfortable with and make sure that the policy you are considering is made for you.
Remember fear of the unknown is your biggest enemy. You will not conquer that fear but take time to make you decisions carefully when buying insurance of any kind and don’t get bulldozed into signing a contract that will end up being of no or little value the day you really need it to come through.