Posts Tagged ‘cover’
Top tips for military personnel buying insurance
December 30, 2011
You are admirably serving your country and in doing so, achieving what most people won’t achieve in a life time, so of course you deserve to reap some benefits. Military discounts are a common way for companies to entice customers, particularly with insurance, so below we have outlined some tips for benefitting from cheaper insurance if you are in the military.
1 Shop around – As there are so many deals available for people serving in the military, you may be spoilt for choice. You can use a price comparison sites which allow you to compare service life insurance quotes quickly and easily, to give you assurance that your family has cover while you’re serving your country. You may need to double check what the military relevant benefits are in each option.
2 Don’t be afraid/ embarrassed to say that you are in the military – Some companies will offer military discounts that they don’t actively advertise, so it’s worth asking when you get a quote.
3 Remember you can get cheaper wedding insurance – Military weddings differ to other weddings in that there is the added risk of cancellation due to emergency and unavoidable Armed Forces postings, so make sure you are covered. There are many insurance companies that cover wedding insurance but as with all aspects of your wedding, you want to make sure that you work with a company that can tailor to your needs.
4 Remember you can get cheaper travel insurance – Whether you are visiting home, relaxing on the shores of the Seychelles or trekking in the Himalayas, remember that there are military discounts to be had on travel insurance. It’s important to know that all your trips are covered due to changes in circumstances that a career in the military can often present.
5 Value your life – Most service personnel benefit from their death in service benefits attached to the Armed Forces Pension Scheme. However, you may look at increasing your level of life insurance cover depending upon your circumstances. More than anything you will want to know that your family is financially protected by Military life insurance, in case the worst did occur and this doesn’t need to cost the earth. Companies such as Trinity Insurance can provide cover for as little as £10.05 per month and this can provide up to £100,000 of cover. Once the cover is in place, if you are then subsequently posted to an area of conflict there will be no need to panic buy as your cover will already be secured.
The main thing to know is that you can have peace of mind and know that you are covered without breaking the bank.
Assurance can up cost of bank loans
December 20, 2011
PF
Illustration: Colin Daniel
Beware the add-ons if you take out an unsecured short-term personal loan from a bank: exorbitant interest rates – in the region of 30 percent – administration charges and life assurance premiums could see your paying back an additional 60 percent-plus on the loan.
The life assurance – which covers the loan in the event of death, disability or retrenchment – into which the banks will steer you is about the most expensive on offer.
The premium on the life assurance may also be added to your loan amount, with the result that you will be charged further interest.
Ordinary life assurance, on average, costs less than a quarter of the life assurance sold by the banks to cover unsecured personal loans.
The life assurance sold by the banks to cover unsecured personal loans is provided by life companies that are owned either by the banks or by companies associated with the banks.
The Financial Services Board (FSB), the National Treasury and the National Credit Regulator are about to launch an investigation into credit life assurance in general, and the investigation will include the banks’ assurance products.
Jonathan Dixon, the FSB’s deputy executive in charge of insurance, says the FSB is concerned about the terms and conditions under which the banks force borrowers to take out high-cost short-term insurance.
The banks use tactics such as insisting that the life assurance includes the payment of a benefit to cover the repayments in case of retrenchment, Dixon says.
Nedbank, for example, argues that almost half the benefits in value paid on the credit life assurance is for retrenchment and that such cover is therefore essential.
However, the chances of claiming for life and disability are far lower for credit life assurance, because most borrowers are younger and not in the high death claim bracket, and this increases the potential profits for banks or associated companies.
The FSB’s investigation into the credit life assurance industry will include a survey that raises questions about assurance products linked to bank products, Dixon says.
The banks appear to be doing everything possible to prevent borrowers from taking out cheaper life assurance options – for example:
* Nedbank financial advisers have told Personal Finance that they have been threatened with disciplinary action if they try to sell more affordable life assurance to people who take out a personal loan.
In response, Nedbank says its financial advisers are not involved in the personal loan arena and claims it “would not threaten disciplinary action to a financial planner (adviser) who gives appropriate financial advice”.
* First National Bank (FNB) recently launched a life assurance product that, it claims, is cheaper than any other similar product (see “FNB product can cut premiums by up to 50 percent”, below).
But the FNB product comes with two conditions:
1. It is available only to select FNB clients; and
2. It is not automatically available to FNB clients who have unsecured short-term personal loans.
* Banks are making it difficult for borrowers to cede existing life assurance policies or new policies by insisting that the policies have a a retrenchment benefit. Very few individually underwritten policies have retrenchment benefits.
The banks have added to the difficulty by not selling stand-alone retrenchment assurance.
The nominal premiums on the policies sold in tandem with personal loans exceed 10 percent of the loan amount, and the premiums are considerably higher than those on normal underwritten life assurance.
Banks, in their documentation, inform clients that they can obtain life assurance elsewhere, but, on the basis of complaints received by Personal Finance, this is often not pointed out verbally. The insinuation often is that in order to qualify for the loan, clients have to buy the “bank’s” credit life assurance.
Staff who issue policies should register under FAIS
Banks may be contravening the Financial Advisory and Intermediary Services (FAIS) Act by not ensuring that employees who issue personal loans and sell life assurance to cover debt are registered as representatives of financial services providers (FSPs).
Nedbank, which is registered with the Financial Services Board (FSB) as an FSP, has told Personal Finance that personal loans “are granted by bankers or personal loan agents, who are not registered under (a) FAIS licence to advise on life assurance. Nedbank financial planners (advisers) are not involved in the granting of personal loans in the unsecured environment.”
Asked whether Nedbank was contravening the FAIS Act, the bank replied that the Act was “not applicable, as bankers and personal loan agents, who grant personal loans, are not registered under FAIS to provide advice”.
In response to Nedbank’s claims, Gerry Anderson, the FSB’s deputy executive in charge of market conduct says: “I have perused the response received by you from Nedbank. It is incorrect to state that an individual who is involved in the sale of an insurance product of any nature (including a bank employee) is not required to be FAIS-registered. The provision or not of advice in such cases is not the determining factor, as intermediary services (the other leg of FAIS) may be involved.”
In a follow-up response, Nedbank says that “due to the fact that personal loan consultants do not provide advice, and perform clerical and administrative services in a subordinate capacity which does not require judgment on the part of consultants, the consultants are not considered to be representatives in terms of FAIS, and accordingly are not required to be registered.
“We are compliant with the requirements of FAIS and are in line with the unsecured lending industry and our competitors.”
What you should know when you buy a bank’s policy
* No bank is entitled in any way to force you into an expensive credit life assurance product, even by inferring that the loan will not be available if you do not buy its product.
Banks are allowed to make life assurance a condition of granting a loan, but they may not prescribe which life assurance you may use.
However, the banks may dictate the type of policy that may be ceded. For example, the banks may, and mostly do, insist that your policy contains cover in case you are retrenched.
You are entitled to, and should shop around for, the cheapest option. Individually risk-rated life assurance may be cheaper, even if you suffer from health problems or are elderly, because the premiums for bank-sold life assurance linked to unsecured short-term personal loans are excessively expensive.
* You may cede an existing life assurance policy to cover the loan should you die or become disabled and are unable to work before the loan is repaid, but there will probably also be a requirement that it has a retrenchment benefit.
* If you use bank-provided life assurance linked to an unsecured short-term loan, always pay the premium separately. Do not allow or accept an option where the premium is added to the loan amount, because, if you do, you will pay interest on the premium.
This is what it can cost you
The total nominal premium for life assurance from Nedbank to cover a loan of R100 000 over two years is R10 558 (R439.95 a month), which equates to 10.6 percent of the value of the loan.
The premium for the individually risk-rated life assurance product from First National Bank (FNB) for a man aged 40 for cover of R1 million is R193 a month, with the premium guaranteed for five years.
So the FNB individual life policy costs you R1 a month for every R5 181 of cover, whereas the Nedbank credit life assurance attached to its personal loans costs R1 a month for every R24of cover.
In other words, 10 times the amount of cover on the FNB policy costs a fraction of the Nedbank credit life cover for R100 000. But roughly the same comparison can be made with the credit life assurance sold by FNB to borrowers with unsecuredpersonal loans.
The situation is worsened by the fact that credit life assurance sold by the banks pays out benefits equal to the reducing outstanding loan amount. This pushes the difference between the cost of the premiums on an individual policy and those on the credit life polices to excessive levels.
The benefits of the FNB product are level for the full period of the assurance, so if you die 18 months into the 24-month loan, your beneficiaries will still receive the full R1 million.
You can buy two types of cover linked to a loan
Life assurance linked to an unsecured loan sold by a bank may or may not be cheaper than a policy you can buy elsewhere.
It depends on whether the policy is sold on what is loosely called a group scheme basis, where everyone is assumed to be more or less equal and pays the same premium, or on an individually risk-rated (or underwritten) basis, where the premiums are adjusted according to your personal circumstances.
If you are individually risk-rated, factors such as your age, gender, health, education, job, hobbies and whether or not you smoke are taken into account.
For example, you will pay a very low premium for an individually risk-rated policy if you are a 25-year-old healthy, non-smoking woman who works as a chartered accountant, but if you are a 60-year-old man who smokes and who works as a semi-skilled labourer in a mine, you may find that a group scheme policy will be cheaper.
In other words, the more likely it is that you will meet an early demise, or suffer from a disease or have an accident that could undermine your ability to earn a living, the more you, as an individual, will pay for life cover.
There is very little cross-subsidisation between high-risk and low-risk individuals with an individually risk-rated policy. But with a group scheme policy, such as a credit life assurance product, there is extensive cross-subsidisation, because it is virtually assumed that everyone is at the same level of risk. The effect is that the young, educated and healthy subsidise the old, less educated and unhealthy.
In most cases, you will be required to undergo a thorough medical check-up before you will be issued with an individually risk-rated policy. Your premium, and even whether or not you will be granted life assurance, will depend on the results of the check-up.
It is likely that you will be asked some questions about your health when you apply for group cover. For example, you may be asked if you currently suffer or have recently suffered from a severe disease. If you do or you did, you may be denied life assurance.
You may also be required to undergo an HIV test, which will determine whether or not you qualify for a policy.
FNB product can cut premiums ‘by up to 50 percent’
First National Bank (FNB) has launched a life assurance product, restricted to its account-holders, that, FNB claims, can cut your premiums by up to 50 percent.
The policy, which is underwritten by FNB’s associated company, RMB Structured Life Limited, provides cover in the event of premature death, as well as optional cover for incapacity (you cannot perform various daily activities) and retrenchment (a lump sum equal to five percent of the life cover up to R100 000, and the premiums are paid for six months).
The death cover is for life, but the incapacity and retrenchment cover is limited to age 60.
There are two premium options:
* A guaranteed premium for the first five years, which may then be increased, depending on your claims history. However, FNB says the pricing has been done as if for life, so it does not expect any significant premium increases over the assured period.
* A premium that escalates at five percent a year. This option allows for a lower initial premium.
The amount of your monthly premium will depend on the additional benefits you choose, your age, gender, income, education, smoker status and general state of health.
Although this is a direct-sell product, it is not a “group” product where the low-risk policyholders cross-subsidise the high-risk policyholders.
Prospective policyholders have to answer questions about their health – the answers to which will affect their premiums – and undergo an HIV test.
The incapacity benefit pays out only once and will reduce the life cover by the amount of the benefit paid. If the incapacity benefit equals the life cover, the entire policy ceases.
The incapacity assurance is not disability assurance but is based on things such as whether you can no longer do your job. It pays out if you are totally and continually unable to wash, dress or feed yourself, or perform physical activity. It also pays out if you suffer from any of 20 serious conditions, ranging from a stroke, a heart attack and cancer to loss of hearing, sight or speech.
There are a number of exemptions and qualifications for the payment of the incapacity benefit, which is based on a points-scoring system according to your inability to perform daily activities. You need a minimum of six points to qualify for a benefit.
Unsecured lending up
The National Credit Regulator (NCR) announced this week that there has been a “continued increase” in unsecured lending over the past quarter.
According to a report by the NCR, unsecured credit increased from R18.95 billion for June 2011 to R21.21 billion for September 2011 – a quarter-on-quarter increase of 11.92 percent.
Rajeen Devpruth, the manager of research and statistics at the NCR, says the increase in unsecured lending may in part be attributed to the 11 additional credit providers that were previously not reported on.
The NCR has cleaned up its database, which now has 4 500 credit providers, Devpruth says.
There is “massive” competition in the market, especially in the area of unsecured loans, among the banks, he says.
The banks continued to dominate the consumer credit market at September 30, with a market share of R1.12 trillion (88.37 percent). Retailers’ share was R38.97 billion (3.08 percent), non-bank vehicle financiers had R41.87 billion (3.31 percent) and “other credit providers” had R66.41 billion (5.24 percent).
Bank credit assurance can ramp up cost of loans
December 18, 2011
PF
Illustration: Colin Daniel
Beware the add-ons if you take out an unsecured short-term personal loan from a bank: exorbitant interest rates – in the region of 30 percent – administration charges and life assurance premiums could see your paying back an additional 60 percent-plus on the loan.
The life assurance – which covers the loan in the event of death, disability or retrenchment – into which the banks will steer you is about the most expensive on offer.
The premium on the life assurance may also be added to your loan amount, with the result that you will be charged further interest.
Ordinary life assurance, on average, costs less than a quarter of the life assurance sold by the banks to cover unsecured personal loans.
The life assurance sold by the banks to cover unsecured personal loans is provided by life companies that are owned either by the banks or by companies associated with the banks.
The Financial Services Board (FSB), the National Treasury and the National Credit Regulator are about to launch an investigation into credit life assurance in general, and the investigation will include the banks’ assurance products.
Jonathan Dixon, the FSB’s deputy executive in charge of insurance, says the FSB is concerned about the terms and conditions under which the banks force borrowers to take out high-cost short-term insurance.
The banks use tactics such as insisting that the life assurance includes the payment of a benefit to cover the repayments in case of retrenchment, Dixon says.
Nedbank, for example, argues that almost half the benefits in value paid on the credit life assurance is for retrenchment and that such cover is therefore essential.
However, the chances of claiming for life and disability are far lower for credit life assurance, because most borrowers are younger and not in the high death claim bracket, and this increases the potential profits for banks or associated companies.
The FSB’s investigation into the credit life assurance industry will include a survey that raises questions about assurance products linked to bank products, Dixon says.
The banks appear to be doing everything possible to prevent borrowers from taking out cheaper life assurance options – for example:
* Nedbank financial advisers have told Personal Finance that they have been threatened with disciplinary action if they try to sell more affordable life assurance to people who take out a personal loan.
In response, Nedbank says its financial advisers are not involved in the personal loan arena and claims it “would not threaten disciplinary action to a financial planner (adviser) who gives appropriate financial advice”.
* First National Bank (FNB) recently launched a life assurance product that, it claims, is cheaper than any other similar product (see “FNB product can cut premiums by up to 50 percent”, below).
But the FNB product comes with two conditions:
1. It is available only to select FNB clients; and
2. It is not automatically available to FNB clients who have unsecured short-term personal loans.
* Banks are making it difficult for borrowers to cede existing life assurance policies or new policies by insisting that the policies have a a retrenchment benefit. Very few individually underwritten policies have retrenchment benefits.
The banks have added to the difficulty by not selling stand-alone retrenchment assurance.
The nominal premiums on the policies sold in tandem with personal loans exceed 10 percent of the loan amount, and the premiums are considerably higher than those on normal underwritten life assurance.
Banks, in their documentation, inform clients that they can obtain life assurance elsewhere, but, on the basis of complaints received by Personal Finance, this is often not pointed out verbally. The insinuation often is that in order to qualify for the loan, clients have to buy the “bank’s” credit life assurance.
Staff who issue policies should register under FAIS
Banks may be contravening the Financial Advisory and Intermediary Services (FAIS) Act by not ensuring that employees who issue personal loans and sell life assurance to cover debt are registered as representatives of financial services providers (FSPs).
Nedbank, which is registered with the Financial Services Board (FSB) as an FSP, has told Personal Finance that personal loans “are granted by bankers or personal loan agents, who are not registered under (a) FAIS licence to advise on life assurance. Nedbank financial planners (advisers) are not involved in the granting of personal loans in the unsecured environment.”
Asked whether Nedbank was contravening the FAIS Act, the bank replied that the Act was “not applicable, as bankers and personal loan agents, who grant personal loans, are not registered under FAIS to provide advice”.
In response to Nedbank’s claims, Gerry Anderson, the FSB’s deputy executive in charge of market conduct says: “I have perused the response received by you from Nedbank. It is incorrect to state that an individual who is involved in the sale of an insurance product of any nature (including a bank employee) is not required to be FAIS-registered. The provision or not of advice in such cases is not the determining factor, as intermediary services (the other leg of FAIS) may be involved.”
In a follow-up response, Nedbank says that “due to the fact that personal loan consultants do not provide advice, and perform clerical and administrative services in a subordinate capacity which does not require judgment on the part of consultants, the consultants are not considered to be representatives in terms of FAIS, and accordingly are not required to be registered.
“We are compliant with the requirements of FAIS and are in line with the unsecured lending industry and our competitors.”
What you should know when you buy a bank’s policy
* No bank is entitled in any way to force you into an expensive credit life assurance product, even by inferring that the loan will not be available if you do not buy its product.
Banks are allowed to make life assurance a condition of granting a loan, but they may not prescribe which life assurance you may use.
However, the banks may dictate the type of policy that may be ceded. For example, the banks may, and mostly do, insist that your policy contains cover in case you are retrenched.
You are entitled to, and should shop around for, the cheapest option. Individually risk-rated life assurance may be cheaper, even if you suffer from health problems or are elderly, because the premiums for bank-sold life assurance linked to unsecured short-term personal loans are excessively expensive.
* You may cede an existing life assurance policy to cover the loan should you die or become disabled and are unable to work before the loan is repaid, but there will probably also be a requirement that it has a retrenchment benefit.
* If you use bank-provided life assurance linked to an unsecured short-term loan, always pay the premium separately. Do not allow or accept an option where the premium is added to the loan amount, because, if you do, you will pay interest on the premium.
This is what it can cost you
The total nominal premium for life assurance from Nedbank to cover a loan of R100 000 over two years is R10 558 (R439.95 a month), which equates to 10.6 percent of the value of the loan.
The premium for the individually risk-rated life assurance product from First National Bank (FNB) for a man aged 40 for cover of R1 million is R193 a month, with the premium guaranteed for five years.
So the FNB individual life policy costs you R1 a month for every R5 181 of cover, whereas the Nedbank credit life assurance attached to its personal loans costs R1 a month for every R24of cover.
In other words, 10 times the amount of cover on the FNB policy costs a fraction of the Nedbank credit life cover for R100 000. But roughly the same comparison can be made with the credit life assurance sold by FNB to borrowers with unsecuredpersonal loans.
The situation is worsened by the fact that credit life assurance sold by the banks pays out benefits equal to the reducing outstanding loan amount. This pushes the difference between the cost of the premiums on an individual policy and those on the credit life polices to excessive levels.
The benefits of the FNB product are level for the full period of the assurance, so if you die 18 months into the 24-month loan, your beneficiaries will still receive the full R1 million.
You can buy two types of cover linked to a loan
Life assurance linked to an unsecured loan sold by a bank may or may not be cheaper than a policy you can buy elsewhere.
It depends on whether the policy is sold on what is loosely called a group scheme basis, where everyone is assumed to be more or less equal and pays the same premium, or on an individually risk-rated (or underwritten) basis, where the premiums are adjusted according to your personal circumstances.
If you are individually risk-rated, factors such as your age, gender, health, education, job, hobbies and whether or not you smoke are taken into account.
For example, you will pay a very low premium for an individually risk-rated policy if you are a 25-year-old healthy, non-smoking woman who works as a chartered accountant, but if you are a 60-year-old man who smokes and who works as a semi-skilled labourer in a mine, you may find that a group scheme policy will be cheaper.
In other words, the more likely it is that you will meet an early demise, or suffer from a disease or have an accident that could undermine your ability to earn a living, the more you, as an individual, will pay for life cover.
There is very little cross-subsidisation between high-risk and low-risk individuals with an individually risk-rated policy. But with a group scheme policy, such as a credit life assurance product, there is extensive cross-subsidisation, because it is virtually assumed that everyone is at the same level of risk. The effect is that the young, educated and healthy subsidise the old, less educated and unhealthy.
In most cases, you will be required to undergo a thorough medical check-up before you will be issued with an individually risk-rated policy. Your premium, and even whether or not you will be granted life assurance, will depend on the results of the check-up.
It is likely that you will be asked some questions about your health when you apply for group cover. For example, you may be asked if you currently suffer or have recently suffered from a severe disease. If you do or you did, you may be denied life assurance.
You may also be required to undergo an HIV test, which will determine whether or not you qualify for a policy.
FNB product can cut premiums ‘by up to 50 percent’
First National Bank (FNB) has launched a life assurance product, restricted to its account-holders, that, FNB claims, can cut your premiums by up to 50 percent.
The policy, which is underwritten by FNB’s associated company, RMB Structured Life Limited, provides cover in the event of premature death, as well as optional cover for incapacity (you cannot perform various daily activities) and retrenchment (a lump sum equal to five percent of the life cover up to R100 000, and the premiums are paid for six months).
The death cover is for life, but the incapacity and retrenchment cover is limited to age 60.
There are two premium options:
* A guaranteed premium for the first five years, which may then be increased, depending on your claims history. However, FNB says the pricing has been done as if for life, so it does not expect any significant premium increases over the assured period.
* A premium that escalates at five percent a year. This option allows for a lower initial premium.
The amount of your monthly premium will depend on the additional benefits you choose, your age, gender, income, education, smoker status and general state of health.
Although this is a direct-sell product, it is not a “group” product where the low-risk policyholders cross-subsidise the high-risk policyholders.
Prospective policyholders have to answer questions about their health – the answers to which will affect their premiums – and undergo an HIV test.
The incapacity benefit pays out only once and will reduce the life cover by the amount of the benefit paid. If the incapacity benefit equals the life cover, the entire policy ceases.
The incapacity assurance is not disability assurance but is based on things such as whether you can no longer do your job. It pays out if you are totally and continually unable to wash, dress or feed yourself, or perform physical activity. It also pays out if you suffer from any of 20 serious conditions, ranging from a stroke, a heart attack and cancer to loss of hearing, sight or speech.
There are a number of exemptions and qualifications for the payment of the incapacity benefit, which is based on a points-scoring system according to your inability to perform daily activities. You need a minimum of six points to qualify for a benefit.
Unsecured lending up
The National Credit Regulator (NCR) announced this week that there has been a “continued increase” in unsecured lending over the past quarter.
According to a report by the NCR, unsecured credit increased from R18.95 billion for June 2011 to R21.21 billion for September 2011 – a quarter-on-quarter increase of 11.92 percent.
Rajeen Devpruth, the manager of research and statistics at the NCR, says the increase in unsecured lending may in part be attributed to the 11 additional credit providers that were previously not reported on.
The NCR has cleaned up its database, which now has 4 500 credit providers, Devpruth says.
There is “massive” competition in the market, especially in the area of unsecured loans, among the banks, he says.
The banks continued to dominate the consumer credit market at September 30, with a market share of R1.12 trillion (88.37 percent). Retailers’ share was R38.97 billion (3.08 percent), non-bank vehicle financiers had R41.87 billion (3.31 percent) and “other credit providers” had R66.41 billion (5.24 percent).
Life Insurance For Mortgages
December 17, 2011
by Mark Johnston December 16, 2011
A mortgage is the biggest financial commitment anyone will ever have and if the unthinkable ever happened, how would a family cope with a large debt and a reduced income.
Life insurance can be very low on people’s lists of priorities when they are in the process of buying a home.
For those buying a home and taking out a mortgage, life insurance can be an important purchase and most lenders will insist that borrowers take out some form of protection.
Along with general family protection, one of the most common reasons for taking out life insurance is to protect a mortgage loan.
Life insurance may seem like an unnecessary additional cost but it is worth considering seriously. This can be particularly crucial if borrowers have family or other dependents, as it can make sure that they can keep a roof over their heads in the event of the borrower’s death.
In the event of a claim during the term, the life insurance company will pay the policy holders beneficiaries or dependents the sum assured as a tax free lump sum. In short this type of insurance is not that complicated, it is designed to payout a lump sum amount that is sufficient enough to repay a mortgage debt should the policy holder die with in the policy term.
The key options to consider for life insurance cover is the amount of cover a borrower would like and how long the policy should run for. It makes sense to set the amount of cover equal to the amount of debt outstanding on a mortgage and the term length equal to the amount of time the mortgage has left to run.
Monthly payments for these policies are usually relatively low, below are some examples of how little theses costs are:
The Co-Operative charges £13.39 a month, where as the HSBC charges £10.50 a month. These quotes are based on £100,000 life cover for 20 years level term, for a non smoking male aged 35 and in normal health.
Many mortgage lenders and brokers are likely to offer life insurance when a potential home buyer takes out a mortgage with them; this however is not always the cheapest option. According to new research less than a fifth of Britons felt they needed help purchasing life insurance.
There are different types of policies and they work in different ways such as:
Level term assurance: this means the amount covered will remain the same through out the duration of the policy.
Decreasing term assurance: this means as the outstanding loan gets smaller the amount covered decreases too.
Most policies may also include a terminal illness benefit which means that if the policy holder is diagnosed with a terminal illness then the policy will still pay out on death, even though the insurer knows beforehand that they are ill.
A wavier premium is also sometimes included in a policy for free, which means if a policy holder became involuntarily unemployed or too ill to work then the life policy payments would still be paid even though the holder may n
Story link – Life Insurance For Mortgages
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Men say worth twice as much as women
December 7, 2011
Men say worth twice as much as women
Tuesday, December 06 10:43:04
New figures released today reveals that Irish men and women vary greatly on the monetary value they put on their lives, with men believing they are worth twice as much as women.
The study from life assurance provider Caledonian Life also shows that this differential is greatest for those in their 50′s.
It looked at individual life protection cover policies taken out and in turn, compared the different levels of cover on these policies , between men and women of different ages.
Mortgage protection polices were excluded from the study.
“Our research shows that the men of Ireland typically insure themselves for double the amount of cover females do. And while the differential is relatively small to begin with (35pc in age 30-39), it grows with age and hits its peak in the age 50-59 category. In this cohort, men have Life cover in place of over two and a half times the amount of women of a comparable age,” said Greg Dyer, Head of Sales and Marketing at Caledonian Life.
He said that the results also showed that men in this case are the mainstay of life cover sales, as they were both more likely to insure themselves and to select a far higher sum assured. In the total pool analysed, 64pc of all single life policies were taken out by males.
Another notable feature of the findings is the low level of cover many people have in place, said Mr dyer.
“For example, E178,000 is quite a worringly small amount of Life cover for a woman in her 50s. In this day and age, many women of that age still have dependant children and often debt in the form of overdrafts, personal loans and so on. If they are a stay at home parent other costs will arrive if they were to die, such as additional childcare. It’s not a thought any of us like to dwell on of course, but this average amount of Life cover would not go a very long way – as a case in point, a E200,000 Life cover payout would only last 4 years and four months for a family with monthly income requirements of E4,000.”
“Interestingly, whether people work outside the home or not doesn’t appear to have significant influence on the level of cover.”
Caledonian say that they considered whether the fact that women typically pay less for life insurance didn’t appear to influence the decision making process.
“While it’s difficult to say what the reasons are behind this gender gap some thoughts from our experts and brokers would be the salary gap: Men still earn considerably more than women – Women’s income in 2007 was around two-thirds of men’s income. Also there are more stay-at-home Moms than Dads and many of these unfortunately do not take out life cover. If they are a stay at home parent, they do not realise the costs of replacing all the tasks carried out by the typical stay at home mother – which could be over E50,000. Families focus on having life cover in place on the Dad, as unfortuntely they have shorter life expentancies.”
Posted in Life Assurance Information | 
Tags: amount, comparable age, cover, dependant children, greg dyer, home, irish men, Life, Life Assurance, life policies, monetary value, mortgage protection, personal loans
Men say worth twice as much as women
December 7, 2011
Men say worth twice as much as women
Tuesday, December 06 10:43:04
New figures released today reveals that Irish men and women vary greatly on the monetary value they put on their lives, with men believing they are worth twice as much as women.
The study from life assurance provider Caledonian Life also shows that this differential is greatest for those in their 50′s.
It looked at individual life protection cover policies taken out and in turn, compared the different levels of cover on these policies , between men and women of different ages.
Mortgage protection polices were excluded from the study.
“Our research shows that the men of Ireland typically insure themselves for double the amount of cover females do. And while the differential is relatively small to begin with (35pc in age 30-39), it grows with age and hits its peak in the age 50-59 category. In this cohort, men have Life cover in place of over two and a half times the amount of women of a comparable age,” said Greg Dyer, Head of Sales and Marketing at Caledonian Life.
He said that the results also showed that men in this case are the mainstay of life cover sales, as they were both more likely to insure themselves and to select a far higher sum assured. In the total pool analysed, 64pc of all single life policies were taken out by males.
Another notable feature of the findings is the low level of cover many people have in place, said Mr dyer.
“For example, E178,000 is quite a worringly small amount of Life cover for a woman in her 50s. In this day and age, many women of that age still have dependant children and often debt in the form of overdrafts, personal loans and so on. If they are a stay at home parent other costs will arrive if they were to die, such as additional childcare. It’s not a thought any of us like to dwell on of course, but this average amount of Life cover would not go a very long way – as a case in point, a E200,000 Life cover payout would only last 4 years and four months for a family with monthly income requirements of E4,000.”
“Interestingly, whether people work outside the home or not doesn’t appear to have significant influence on the level of cover.”
Caledonian say that they considered whether the fact that women typically pay less for life insurance didn’t appear to influence the decision making process.
“While it’s difficult to say what the reasons are behind this gender gap some thoughts from our experts and brokers would be the salary gap: Men still earn considerably more than women – Women’s income in 2007 was around two-thirds of men’s income. Also there are more stay-at-home Moms than Dads and many of these unfortunately do not take out life cover. If they are a stay at home parent, they do not realise the costs of replacing all the tasks carried out by the typical stay at home mother – which could be over E50,000. Families focus on having life cover in place on the Dad, as unfortuntely they have shorter life expentancies.”
£245 Billion Worth of Mortgages Not Protected by Life Insurance According to a Study by Sainsbury’s Finance
November 27, 2011
Four in ten mortgage holders do not have life cover to protect their mortgage(1).
(PRWEB UK) 7 November 2011
Four out of ten mortgage holders in Britain (41%) do not have their mortgage contributions covered by life insurance, according to new research(1) from Sainsbury’s Life Insurance. The findings suggest that there are nearly seven million people with a collective outstanding mortgage balance of £245 billion who have no life insurance to cover their mortgage and provide support to their dependents in event of their death.
On average, those who pay towards a mortgage and aren’t covered by life protection are currently personally responsible for an outstanding balance of over £36,000.
Worryingly, many of those in age groups who are likely to have dependants are unprotected, with the research showing that one in three (33%) 35 to 44 year olds don’t have life insurance to protect their mortgage payments, and nearly a third (30%) of 45 to 54 year olds do not have this type of cover.
Head of Sainsbury’s Life Insurance, Helen Williams commented: “Mortgage repayments are one of the biggest financial commitments in many peoples’ lives but, as our research shows, unfortunately it is not something that enough mortgage holders have taken steps to protect. There could be many reasons for this, perhaps some may feel it is less of a priority than other items on their household budget however, being unprotected could have serious implications.
“Having life insurance gives those with a family peace of mind that should the unthinkable happen and they die, their dependants can continue living in the family home with the lifestyle they have without worrying about the financial implications. We would urge anyone who doesn’t have life insurance to consider taking out a policy, and those who do and have moved to a bigger house to make sure it is updated to reflect their mortgage commitment.”
Sainsbury’s Life insurance premiums start from as little as £5 a month (which is 16p per day)(2) and are among the most competitive available, regularly appearing in best-buy tables. The provider was recently awarded Most Competitive Term Assurance Direct Provider at this year’s Moneyfacts Awards.
New Sainsbury’s Life Insurance customers will benefit from double Nectar points on all Sainsbury’s shopping in-store, online and in petrol filling stations for two years. When using their Nectar card in-store at the till customers could benefit from the equivalent of up to 2% off their Sainsbury’s purchases(3). For example, those spending £49 a week in-store at Sainsbury’s could, over a year, earn up to a week’s free shopping(4).
When you know what cover you require, please contact Sainsbury’s Life Insurance for a quote or for further information on 0800 027 7166 (calls may be monitored and recorded). Further information is also available at http://www.sainsburysfinance.co.uk/ or at Sainsbury’s supermarkets. Sainsbury’s Life Insurance does not offer financial advice.
Notes to Editors:
The information contained in this press release is intended solely for journalists and should not be relied upon by private investors or any other persons to make financial decisions.
(1) 719 GB adults with a mortgage were interviewed by ICM in an online survey between 16th and 18th September 2011. Interviews were conducted across the country and the results have been weighted to the profile of all adults. ICM is a member of the British Polling Council and abides by its rules. Further information at http://www.icmresearch.co.uk
(2) Sainsbury’s Finance Life Cover (Level Term Assurance and Mortgage Decreasing Term Assurance) is provided by Legal General Assurance Society Limited. The cost of life cover will depend on the customer’s age, term of the policy, options selected and state of health.
(3) Terms and conditions apply, see http://www.sainsburysfinance.co.uk for full details. Points are not available on a limited range of Sainsbury’s goods and services – see in-store or sainsburys.co.uk/nectar for details.
(4) Week’s free shopping earned by combining base points earned in-store/online and offer bonus points for 2 years when you collect double Nectar points with selected finance products. For example, £49 per weekly spend over a year earned 10,912 Nectar points = £50 approx to redeem in-store. Bonus Nectar points subject to a monthly maximum of 2,500 points per qualifying product type per month.
Sainsbury’s Finance:
To view our latest press releases and product information, please visit the Sainsbury’s Finance online media centre at http://www.sainsburysfinance.co.uk/media
Sainsbury’s was the first major British supermarket to open a bank, commencing trading in February 1997. Benefiting from a fantastic, trusted brand that enables us to combine the shopping experience with personal finance, Sainsbury’s Finance provides a range of quality products including insurances, credit cards, savings and loans. Our proposition is to make shopping more rewarding by offering customers great products at fair prices, while consistently rewarding shoppers for their loyalty and being easy to do business with at all times. Our products consistently top Best Buy tables and regularly win awards for quality, price and service.
Sainsbury’s Finance recent awards include Best Overall Online Provider, Best Online Pet Insurance Provider, Best Online Personal Loan Provider and Best Direct Home Insurance Provider at the Your Money Awards 2011. It was also named Most Competitive Term Assurance Direct Provider at the Moneyfacts Awards 2011.
Sainsbury’s Finance is a joint venture between J.Sainsbury plc and Lloyds Banking Group.
For further information and general Sainsbury’s Finance enquiries customers can call the freephone number on 0500 40 50 60 or visit http://www.sainsburysfinance.co.uk/
###
Tom Wilson
Citigate Dewe Rogerson
020 7638 9571
Email Information
Health and life insurance: how much cover do you need?
November 26, 2011
If you are planning to buy a life or health insurance policy and are not sure how much is enough, here is a quick guide to help you out.
Life insurance
The general thumb rule says that you should not have less than 8-10 times your gross annual income as life insurance cover.
So, if your annual gross salary is Rs 1 lakh, then you should take R8-10 lakh insurance. Anything less means you are under-insured, which means in case of your death, your dependants may not have adequate funds. Keep in mind that while going in for a life insurance policy, a term plan is the best bet.
Health insurance
There is no thumb rule to guide you about the amount of health insurance you need. Financial planners say that keeping in mind the average cost of major surgeries these days, a cover of R4 lakh is good enough. Also, if you are covered by your employer for say Rs 2 lakh, you can go in for an individual health policy of another Rs 2 lakh, provided that you work at a reputable company and don’t change jobs frequently.
If you have a family, you can top up your individual policy with a family floater. Keep in mind that even though a family floater policy covers all the members of the family, even if you make a claim for one member of the family, the amount that was claimed will reduce the sum insured by that much. For instance, if your family floater policy offers a sum insured amount of R3 lakh and one member makes a claim of Rs 1 lakh, the sum insured for the rest of the year would be reduced to Rs 2 lakh.
What should you do?
The above-mentioned figures do not take into account your specific individual situation. These one-size-fits-all thumb rules come handy when you don’t have immediate access to the Internet and your agent is trying to sell you a insurance policy. There are many online insurance amount calculators, available on the website of insurance companies that can provide you an in-depth view of the total life insurance amount you need based on your age, life stage and lifestyle.
Don’t pay over the odds for life insurance cover
November 23, 2011
Danny and Anna West
CHEAPEST isn’t always best when it comes to financial products, especially insurance cover.
However, life insurance could be the one exception to the rule, as a Your Money investigation revealed.
We have found that some people could be paying up to 30% more for exactly the same cover and up to 40% more if they are a smoker.
Why? Simply because of the commission earned flogging you the policy.
More and more people are taking the purchase of life insurance into their own hands in order to avoid paying excessive commission to financial advisers, and they are heading online hoping to look for the best deals.
But, as we have discovered, many of the comparison sites and financial firms selling life cover are earning hefty commissions that can easily equal those of the financial advisers.
Yet they do not provide any of the one-to-one advice that financial advisers offer that can help clients find products to suit their individual circumstances.
Comparison sites, supermarkets banks and building societies simply act as a broker because the insurance product itself is provided by insurance firms.
This means that exactly the same product can be sold for a range of prices. There is one site that stands out from the crowd with a simple, transparent offering. Cavendish Online takes no commission and instead charges a one-off fee of £35 for the same non-advisory service.
This means the cost of life insurance is dramatically reduced and could save you thousands of pounds over the term of a policy.
An Aviva Term Life Assurance policy with a £300,000 lump sum will cost from £19.69 per month through Cavendish Online and you will pay a £35 flat fee.
But buy it from Asda and it will cost you £26.23 a month, they will earn £669.03 commission, and you will pay an extra £1,534.60 for exactly the same cover over a 20-year term.
The difference on the same policy for a smoker is from £37.82 per month with Cavendish compared to £54.20 with Asda – and that will add a whopping £3,931.20 to the cost over 20 years.
Ian Williams, managing director at Cavendish Online, says: “We were established as the first fee-based discount insurance broker, and we set our fee at £35 in anticipation of the time it would take us to process an application, rather than basing it on what our competitors were charging.
“It is impossible to justify the amount of commission charged by comparison sites. To date we remain the cheapest route to buy life assurance.”
Life insurance is one of the “cleanest” covers – it is free from all the complexities of other insurances as the payout is fixed, and there is usually no argument over whether someone is dead. So, as long as you have been honest and disclosed any pre-existing conditions and health issues, such as smoking, it’s simple.
All policies come from a handful of insurers, the two main players being Legal General and Aviva, which makes it easier to compare prices via brokers.
Brokers are the best way to buy, because you won’t avoid commissions by buying direct from an insurer.
Make sure you check the comparison sites and check the small print. Do not get caught out paying over the odds for cover. It is important to have your finances protected – but that has to be by buying the right cover at the right price.
£245 Billion Worth of Mortgages Not Protected by Life Insurance According to a Study by Sainsbury’s Finance
November 9, 2011
Four in ten mortgage holders do not have life cover to protect their mortgage(1).
(PRWEB UK) 7 November 2011
Four out of ten mortgage holders in Britain (41%) do not have their mortgage contributions covered by life insurance, according to new research(1) from Sainsbury’s Life Insurance. The findings suggest that there are nearly seven million people with a collective outstanding mortgage balance of £245 billion who have no life insurance to cover their mortgage and provide support to their dependents in event of their death.
On average, those who pay towards a mortgage and aren’t covered by life protection are currently personally responsible for an outstanding balance of over £36,000.
Worryingly, many of those in age groups who are likely to have dependants are unprotected, with the research showing that one in three (33%) 35 to 44 year olds don’t have life insurance to protect their mortgage payments, and nearly a third (30%) of 45 to 54 year olds do not have this type of cover.
Head of Sainsbury’s Life Insurance, Helen Williams commented: “Mortgage repayments are one of the biggest financial commitments in many peoples’ lives but, as our research shows, unfortunately it is not something that enough mortgage holders have taken steps to protect. There could be many reasons for this, perhaps some may feel it is less of a priority than other items on their household budget however, being unprotected could have serious implications.
“Having life insurance gives those with a family peace of mind that should the unthinkable happen and they die, their dependants can continue living in the family home with the lifestyle they have without worrying about the financial implications. We would urge anyone who doesn’t have life insurance to consider taking out a policy, and those who do and have moved to a bigger house to make sure it is updated to reflect their mortgage commitment.”
Sainsbury’s Life insurance premiums start from as little as £5 a month (which is 16p per day)(2) and are among the most competitive available, regularly appearing in best-buy tables. The provider was recently awarded Most Competitive Term Assurance Direct Provider at this year’s Moneyfacts Awards.
New Sainsbury’s Life Insurance customers will benefit from double Nectar points on all Sainsbury’s shopping in-store, online and in petrol filling stations for two years. When using their Nectar card in-store at the till customers could benefit from the equivalent of up to 2% off their Sainsbury’s purchases(3). For example, those spending £49 a week in-store at Sainsbury’s could, over a year, earn up to a week’s free shopping(4).
When you know what cover you require, please contact Sainsbury’s Life Insurance for a quote or for further information on 0800 027 7166 (calls may be monitored and recorded). Further information is also available at http://www.sainsburysfinance.co.uk/ or at Sainsbury’s supermarkets. Sainsbury’s Life Insurance does not offer financial advice.
Notes to Editors:
The information contained in this press release is intended solely for journalists and should not be relied upon by private investors or any other persons to make financial decisions.
(1) 719 GB adults with a mortgage were interviewed by ICM in an online survey between 16th and 18th September 2011. Interviews were conducted across the country and the results have been weighted to the profile of all adults. ICM is a member of the British Polling Council and abides by its rules. Further information at http://www.icmresearch.co.uk
(2) Sainsbury’s Finance Life Cover (Level Term Assurance and Mortgage Decreasing Term Assurance) is provided by Legal General Assurance Society Limited. The cost of life cover will depend on the customer’s age, term of the policy, options selected and state of health.
(3) Terms and conditions apply, see http://www.sainsburysfinance.co.uk for full details. Points are not available on a limited range of Sainsbury’s goods and services – see in-store or sainsburys.co.uk/nectar for details.
(4) Week’s free shopping earned by combining base points earned in-store/online and offer bonus points for 2 years when you collect double Nectar points with selected finance products. For example, £49 per weekly spend over a year earned 10,912 Nectar points = £50 approx to redeem in-store. Bonus Nectar points subject to a monthly maximum of 2,500 points per qualifying product type per month.
Sainsbury’s Finance:
To view our latest press releases and product information, please visit the Sainsbury’s Finance online media centre at http://www.sainsburysfinance.co.uk/media
Sainsbury’s was the first major British supermarket to open a bank, commencing trading in February 1997. Benefiting from a fantastic, trusted brand that enables us to combine the shopping experience with personal finance, Sainsbury’s Finance provides a range of quality products including insurances, credit cards, savings and loans. Our proposition is to make shopping more rewarding by offering customers great products at fair prices, while consistently rewarding shoppers for their loyalty and being easy to do business with at all times. Our products consistently top Best Buy tables and regularly win awards for quality, price and service.
Sainsbury’s Finance recent awards include Best Overall Online Provider, Best Online Pet Insurance Provider, Best Online Personal Loan Provider and Best Direct Home Insurance Provider at the Your Money Awards 2011. It was also named Most Competitive Term Assurance Direct Provider at the Moneyfacts Awards 2011.
Sainsbury’s Finance is a joint venture between J.Sainsbury plc and Lloyds Banking Group.
For further information and general Sainsbury’s Finance enquiries customers can call the freephone number on 0500 40 50 60 or visit http://www.sainsburysfinance.co.uk/
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For the original version on PRWeb visit: http://www.prweb.com/releases/prweb2011/11/prweb8938051.htm
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