Professional Insurance Brokers Association chief executive Diarmuid Kelly has spoken out about some sharp practice by the banks which is said to be 'widespread' at the moment.
Banks are examining their customers direct debits in an attempt to up sell them on their own life assurance and other products.
It seems they will look through the list of customers direct debits and if they notice payments to life assurance companies they will contact them to try and get them to change their cover to their own providers.
While people should regularly ensure that they are getting value for money from the financial products they have, it must be remembered that the banks will only be able to quote customers on products from life companies either owned by the bank, or acting as 'tied agents' to the bank. A independent financial advisor/broker will be able to quote you from a number of life companies, ensuring that you are getting proper advice on the products you choose. Strictly speaking cheapest is not always best, everyones personal needs are different and you should ensure that the advice you get takes the whole market into account and not just a single life company.
In retort the Irish Banking Federation have advised that the practice is not in breech of the Consumer protection code or data protection legislation.
FS
Showing posts with label life assurance. Show all posts
Showing posts with label life assurance. Show all posts
Friday, 10 June 2011
Saturday, 30 April 2011
Life Assurance beginners guide part 4- Policy options and common terms
If your not familiar with Life Assurance Contracts, your eyes probably glaze over when your confronted with some of the language used, il try and shed some light on some of the policy terms and options available.
Critical Illness/Specified Illness: If you take this option on your life assurance, the company promises to pay a lump sum in the event of you contracting one of the illnesses listed on your policy. This is likely to include heart attack, cancers, organ failure....the list goes on, some companies cover 40+ illnesses. This can be taken out as a stand alone policy or can be included with the decreasing/level/whole of life type policies described in other posts. Critical Illness can be expensive as you are more likely to claim for a critical illness then to die during any particular period of time. If you include 'CI' in your life policy you will have the option to have it 'accelarated' or 'double cover'. Accelerated is cheaper as it means that if you claim on your CI, your life cover will be reduced by that amount. If you have 200k life and double cover critical illness policy, then you can claim 200k on your CI and there can be a further 200k paid out in the event of death.
Children's Life or Critical Illness: This is usually a complimentary added benefit to all policies, it will pay out a nominal sum in the event of the death of a child (6mths to 18 years) or if they contract a listed critical illness.
Hospital Cash: If you are hospitalised this benefit promises to pay you a set amount each day, eg €65, that you are in hospital. There will be a deferral period, ie you must be in hospital for 3/7 days before the payments will begin. There is also a upper limit on how many days in any year they will pay out on.
Surgical Cash: If you undergo surgery this will pay out a fixed amount, minor and major surgeries will be paid different amounts.
Sum Assured: This is the amount you are covered for.
Indexation: The ability to increase your life cover annually without medical evidence, usually 3% or 5%. Your premium will increase by a bigger % than the increase in cover.
Guaranteed Increase Option: This can be offered at regular periods whereby you have the option to increase your cover by say 20% without evidence of health. Your premium will increase by a bigger % than the increase in cover.
Premium: This is amount you pay for your cover, it can be paid monthly, quarterly or annually.
Life Assured: The person(s) who are covered on the policy. The life assured does not have to be the policy owner, ie a husband can own a policy that would pay out in the event of the death of his wife.
Deed of Assignment: The document that a lender will send to a life company to assume a hold over a policy, usually connected to a mortgage/loan.
Letter of no further interest: Confirmation from a lender that they are releasing their interest in a policy, usually only when a mortgage/loan has been cleared.
Exit Tax: Levied at 30% on any 'profits' made through a investment with a life assurance company.
Early Encashment Penalty: Levied by the life company to discourage cashing a policy in earlier than agreed.
Exclusion: Where a life company will cover you for critical illness or income protection but will exclude certain claims if they are related to a pre existing condition illness, eg back problems, mental heatlh problems in the past.
Special Terms: Where a life company will cover you for life/criticall illness but you will have to pay a higher premium due to a risk that you pose to them. Eg over weight/previous poor health.
Proposal Form: The form you complete to apply for a policy.
Underwriting: The process of assessing risk.
Market Value Adjustment: A reduction in the value of funds held within a 'with profit' fund to reflect the true market value. This is done to prevent 'profit taking' at the expense of existing policy holders.
FS
Critical Illness/Specified Illness: If you take this option on your life assurance, the company promises to pay a lump sum in the event of you contracting one of the illnesses listed on your policy. This is likely to include heart attack, cancers, organ failure....the list goes on, some companies cover 40+ illnesses. This can be taken out as a stand alone policy or can be included with the decreasing/level/whole of life type policies described in other posts. Critical Illness can be expensive as you are more likely to claim for a critical illness then to die during any particular period of time. If you include 'CI' in your life policy you will have the option to have it 'accelarated' or 'double cover'. Accelerated is cheaper as it means that if you claim on your CI, your life cover will be reduced by that amount. If you have 200k life and double cover critical illness policy, then you can claim 200k on your CI and there can be a further 200k paid out in the event of death.
Children's Life or Critical Illness: This is usually a complimentary added benefit to all policies, it will pay out a nominal sum in the event of the death of a child (6mths to 18 years) or if they contract a listed critical illness.
Hospital Cash: If you are hospitalised this benefit promises to pay you a set amount each day, eg €65, that you are in hospital. There will be a deferral period, ie you must be in hospital for 3/7 days before the payments will begin. There is also a upper limit on how many days in any year they will pay out on.
Surgical Cash: If you undergo surgery this will pay out a fixed amount, minor and major surgeries will be paid different amounts.
Sum Assured: This is the amount you are covered for.
Indexation: The ability to increase your life cover annually without medical evidence, usually 3% or 5%. Your premium will increase by a bigger % than the increase in cover.
Guaranteed Increase Option: This can be offered at regular periods whereby you have the option to increase your cover by say 20% without evidence of health. Your premium will increase by a bigger % than the increase in cover.
Premium: This is amount you pay for your cover, it can be paid monthly, quarterly or annually.
Life Assured: The person(s) who are covered on the policy. The life assured does not have to be the policy owner, ie a husband can own a policy that would pay out in the event of the death of his wife.
Deed of Assignment: The document that a lender will send to a life company to assume a hold over a policy, usually connected to a mortgage/loan.
Letter of no further interest: Confirmation from a lender that they are releasing their interest in a policy, usually only when a mortgage/loan has been cleared.
Exit Tax: Levied at 30% on any 'profits' made through a investment with a life assurance company.
Early Encashment Penalty: Levied by the life company to discourage cashing a policy in earlier than agreed.
Exclusion: Where a life company will cover you for critical illness or income protection but will exclude certain claims if they are related to a pre existing condition illness, eg back problems, mental heatlh problems in the past.
Special Terms: Where a life company will cover you for life/criticall illness but you will have to pay a higher premium due to a risk that you pose to them. Eg over weight/previous poor health.
Proposal Form: The form you complete to apply for a policy.
Underwriting: The process of assessing risk.
Market Value Adjustment: A reduction in the value of funds held within a 'with profit' fund to reflect the true market value. This is done to prevent 'profit taking' at the expense of existing policy holders.
FS
Life Assurance beginners guide part 3- Whole of Life Policies
Whole of life policies can potentially cover you for the WHOLE of your life, ie there is no set maturity/expiry date, these can provide very extensive cover and can have many additional options attaching to them, but they will get more expensive over the years......
Similarly to the decreasing or level term type policies, you nominate the level of cover you wish to have. The premium will depend upon underwriting where your age, health, smoker status etc will be taken into account. The term of your policy is not limited, its open ended, hence 'whole of life', but be aware that the premium you pay at the start is not guaranteed, the life company will carry out reviews on the policy at predetermined intervals, every 5 years, or annually after age 70 for example.
At the review the company can ask you to pay a higher premium for the same level of cover for the period until your next review. In fact its inevitable that the premium will rise over the years, as one gets older, the risk increases.
So whats the benefit of Whole of life policies?
FS
Similarly to the decreasing or level term type policies, you nominate the level of cover you wish to have. The premium will depend upon underwriting where your age, health, smoker status etc will be taken into account. The term of your policy is not limited, its open ended, hence 'whole of life', but be aware that the premium you pay at the start is not guaranteed, the life company will carry out reviews on the policy at predetermined intervals, every 5 years, or annually after age 70 for example.
At the review the company can ask you to pay a higher premium for the same level of cover for the period until your next review. In fact its inevitable that the premium will rise over the years, as one gets older, the risk increases.
So whats the benefit of Whole of life policies?
- They can provide very comprehensive cover for your family.
- Once your policy is in force and you continue to pay the premiums you will stay on cover. It wont expire after a set length of time.
- In the event of deteriorating health you may find it hard or impossible to get life cover, with a whole of life policy this is not an issue.
- There are many additional added cover options, hospital cash/surgical cash/critical illness cover.
- These policies may build up a surrender value over time.
- They can be assigned to your lender as security against a loan/mortgage.
- They are flexible, you have the option to reduce cover when you need to.
FS
Wednesday, 27 April 2011
Life Assurance a Beginners Guide
Life Assurance is the type of thing that few of us think about until its probably too late, indeed its the type of thing that we actually never want to need, but the inevitable will happen one day and its better to be adequately prepared.
There are numerous types of policies and each serve their own particular purpose, its best to speak to your financial advisor to have a full review done, he/she will let you know whats the right level and type of cover for you and your situation.
Perhaps its obvious to say but Life Assurance is sold by Life companies, eg Aviva, Canada Life, Friends First etc. In return for a premium, they will promise to pay out a sum of money if an insured event happens. This usually means death, but critical illness is also an optional cover to have.
I will give some information on the main types of Life Assurance. The first type is decreasing term cover.
Decreasing Term Life Assurance
This is the most common form of life assurance in the Irish Market and is usually taken out in connection to a mortgage. It promises to clear your mortgage in the event of death. The level of cover will reduce year by year in line with what is outstanding on your mortgage (apart from a few exceptions, everyone who takes out a residential mortgage is legally obliged to have at least enough life cover to clear the loan in the event of death).
This is the cheapest form of life cover as the risk to the life company is decreasing annually. The premium for this type of policy remains the same for the term of your policy.
This policy will usually be 'assigned' to your bank as security against you mortgage, ie the bank will use the proceeds of the policy to clear your mortgage. Any amount over and above what it takes to clear the mortgage will be refunded to your estate or to the surviving party on the policy should there be two people covered.
If you have cleared your mortgage, it does not make your policy invalid or useless in anyway. As far as your life assurance company is concerned they don't care if you have a mortgage or not, you are paying them to provide you cover, and they will continue to do so weather you have a mortgage or not.
These policies work well with mortgages as the cover decreases and is the cheapest way to cover your obligation to have life assurance. If you are looking for cover to provide for your family if you were to pass away, this would not generally be the type of policy to choose, as it decreases annually, this will of course provide less and less benefit over the years. In my next posts i shall go through other forms of cover and various options and terms common to life assurance.
Again if there is something you want me to cover in more detail, please let me know.
FS
There are numerous types of policies and each serve their own particular purpose, its best to speak to your financial advisor to have a full review done, he/she will let you know whats the right level and type of cover for you and your situation.
Perhaps its obvious to say but Life Assurance is sold by Life companies, eg Aviva, Canada Life, Friends First etc. In return for a premium, they will promise to pay out a sum of money if an insured event happens. This usually means death, but critical illness is also an optional cover to have.
I will give some information on the main types of Life Assurance. The first type is decreasing term cover.
Decreasing Term Life Assurance
This is the most common form of life assurance in the Irish Market and is usually taken out in connection to a mortgage. It promises to clear your mortgage in the event of death. The level of cover will reduce year by year in line with what is outstanding on your mortgage (apart from a few exceptions, everyone who takes out a residential mortgage is legally obliged to have at least enough life cover to clear the loan in the event of death).
This is the cheapest form of life cover as the risk to the life company is decreasing annually. The premium for this type of policy remains the same for the term of your policy.
This policy will usually be 'assigned' to your bank as security against you mortgage, ie the bank will use the proceeds of the policy to clear your mortgage. Any amount over and above what it takes to clear the mortgage will be refunded to your estate or to the surviving party on the policy should there be two people covered.
If you have cleared your mortgage, it does not make your policy invalid or useless in anyway. As far as your life assurance company is concerned they don't care if you have a mortgage or not, you are paying them to provide you cover, and they will continue to do so weather you have a mortgage or not.
These policies work well with mortgages as the cover decreases and is the cheapest way to cover your obligation to have life assurance. If you are looking for cover to provide for your family if you were to pass away, this would not generally be the type of policy to choose, as it decreases annually, this will of course provide less and less benefit over the years. In my next posts i shall go through other forms of cover and various options and terms common to life assurance.
Again if there is something you want me to cover in more detail, please let me know.
FS
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