SimplyFinance - Insurance

Were you mis-sold Payment Protection Insurance?

2010-08-09T23:00:00Z

Following an extensive review of the Payment Protection Insurance (PPI) market several years ago, it came to light that thousands of consumers have been unfairly sold this cover when taking out other financial products such as personal loans, credit cards or store cards. The Financial Services Authority (FSA), the regulatory body governing the financial services industry, carried out the review.

As a result of their findings, the FSA took action against 24 firms and individuals for unfair sales practices, resulting in almost 13 million GBP in fines. Since the investigation, any consumer suspecting that they may have been mis-sold PPI has been urged to seek compensation. We take a look at Payment Protection Insurance, the FSA's plans for cleaning up the industry, and what you can do if you feel you may have been a victim of mis-selling.

What is Payment Protection Insurance?

Payment protection insurance (PPI) is not in itself a bad or harmful product, and can in fact offer valuable against financial difficulties in the event of unforeseen circumstances. PPI (also often known as 'loan protection insurance') is designed to help you to meet the repayments on your loan or card should you unexpectedly lose your income through redundancy, illness or injury. The exact policy details vary from provider to provider, but essentially the insurance would cover the costs of your monthly repayments over a given time period.

If you do decide that you want to take out this type of insurance, you are under no obligation to buy it from your loan or card provider. Indeed, if you choose to take out your insurance as part of a package with the product itself, it's highly likely that you'll be paying over the odds for it. Simply look up loan protection insurance or credit card insurance online in order to see how much you could be saving by choosing a separate provider.

In what circumstances might PPI have been mis-sold?

Payment Protection Insurance is deemed to have been mis-sold if:

* You were never eligible to make a claim. There are a number of exclusions on a typical Payment Protection Insurance policy (for example, preventing claims where the loss of income was caused by a pre-existing medical condition), so you should have been asked the appropriate questions before taking the policy out to determine whether the cover was actually suitable for your circumstances.

* You didn't realise that the cover was optional.

* You didn't realise you were taking out the cover, or were not completely sure what it involved.

* You were not informed that that you would also have to pay interest on the insurance cost, as well as paying interest on the loan or card debt. You should have also been warned that your PPI policy may expire before the end of the loan term (many PPI policies only last 5 years) but that you'll still need to pay interest on the premium.

What to do if you have been mis-sold PPI

If you have PPI and either did not want it in the first place or do not now feel it is necessary, you should be able to cancel the insurance. Check the policy document to verify that this is the case. If you want to make a complaint, you should write to the insurance provider in the first instance and explain to them why you feel that you were unfairly sold the cover. If your claim is rejected, you can approach the Financial Ombudsman Service (www.financial-ombudsman.org.uk).

The future of PPI

Since the initial review, the FSA has introduced a series of new measures defining how PPI should be sold in the future, laid out in a handbook for financial advisors. Although these reforms have to be in place by 1 December 2010, the Financial Services Consumer Panel has urged those selling PPI to start adhering to the guidelines as soon as possible, rather than waiting for December.

Kay Blair, Vice Chairman of the Financial Services Consumer Panel said: "Consumers deserve to get an early Christmas present from firms and should not have to wait until the new 1 December deadline. The financial services industry has been dragging its feet over resolving PPI mis-selling and letting down customers by not handling their complaints fairly. Consumers with rejected PPI complaints should consider taking them to the Financial Ombudsman Service, where 81% of complaints are currently being upheld."

Insurance: A Battle of the Sexes?

2009-06-24T23:00:00Z

Before insurance companies can give you a quote, you will be asked to fill out a form providing them with personal information such as your date of birth, your gender and whether or not you are a smoker. The cost of your premium will totally depend on the information that you provide, since the insurer will match this against statistical data to determine how likely you are to make a claim.

One of the major factors for insurance products such motor insurance and private medical insurance is your gender. To ensure that this is all above board, sex discrimination regulations were put into place in April 2008 stipulating that insurers are only allowed to base gender-related price decisions on accurate statistical data, and the rules also state that this data must be regularly updated and published. Looking at these statistics would not necessarily help you to predict the exact cost of your premium, however they do throw some light on the differences between the sexes where it comes to insurance claims.

Motor Insurance

It is an oft-published fact that women have fewer motor accidents than men and make fewer claims. Many insurers have women-specific motor insurance products, and some go so far as to base their entire product range around women, on the basis that women make safer drivers. Data published by the Association of British Insurers shows that between the ages of 17-35, the cost of a female policy claim cost as little as 47% of a male claim. However, the premium costs do start to balance out above this age, showing that it is specifically younger male drivers that are seen as a risk by the insurers.

A study by the social issues research centre* shows that the psychology of male and female drivers can differ greatly, and that levels of aggression and risk-taking behaviour when driving can contribute to the gender bias when it comes to premiums. However in reality, motor insurance premiums are based on a number of 'risk rating' factors, of which sex is just one. These include age, postcode, mileage driven, the type of vehicle and whether you have built up a no-claims discount. Therefore, all the male drivers out there will be pleased to hear that as long as you save the Formula One driving for the Xbox, the gender gap shouldn't cost you more on your premiums.

Private Medical Insurance

According to a recent survey by life and pensions company Friends Provident shows that men are less concerned about their health than women. This manifests itself as an unwillingness to visit the doctor to get symptoms checked out, a lack of knowledge about checking lumps and moles for cancerous signs and a lack of concern about addressing hereditary conditions. Mark Jones, head of protection at Friends Provident said "A significant majority (61%) of men acknowledge that they take more risks with their health than women. Despite this men don't seem to be taking the relevant actions to improve their health and we are urging them to do so."

The survey also found that 87% of men have no private medical insurance, at a time when private medical insurance policies have never been more readily available. Interestingly, the average cost of a private medical insurance claim for a woman is statistically much higher than a male claim (according to the association of British Insurers) meaning that private medical insurance is often cheaper for young and middle-aged men than it is for woman of the same age.

Of course many factors are taken into consideration when insurers are working out your 'risk rating' before offering you a quote. Where in the country you live, whether you smoke and how healthy your lifestyle is could all affect the cost of private medical insurance, and if you are generally in good physical shape, you will reap the benefits regardless of your gender. Nonetheless, the cost of private medical insurance for men may be cheaper than you would expect, so it may pay to take a bit more interest in your health and get a quote today.

*http://www.sirc.org/publik/driving_risk.shtml

Top 5 Financial Reasons to Quit Smoking in 2010

2009-12-15T00:00:00Z

Since the smoking ban started, smokers may be feeling a little put-upon. Unfortunately, it doesn't stop with the icy-cold outside smoking area in pubs, as many products and services come at a premium when you smoke.

Here is a guide to some of the ways you could save thousands each year, which will hopefully kick-start your resolutions if you are planning to quit in the New Year!

Cheaper Private Health Insurance

You might have heard the odd rumour that that smoking isn't so good for your health. Since smoking kills around 114,000 people a year, the obvious place you're going to notice the financial burden of smoking is on your health insurance premiums.

Tempting as it is to not tell your insurer that you smoke, you would lose out if you ever had to claim for a smoking-related illness because of course your claim would be invalidated. Even if you have recently quit, in insurance terms you're not considered to be a non-smoker until you have been smoke-free for 12 months or longer, so if you are asked when you last smoked, you'd need to be 100% honest.

When you've passed the year benchmark however, shop around for private health insurance and you'll notice the price difference immediately. Make sure to ask your current provider for a new quote, and if you find a more competitive deal elsewhere as a non-smoker, ask them to match it. They are likely to agree in order to keep you as a customer.

Get a free, no-obligation Private Health Insurance quote here >>

Cheaper Term Life Insurance

Term Life insurance gives your family financial protection if you should die within a certain period (say, 20 years). Statistically, smokers have a lower life expectancy than non-smokers. Therefore, any term life insurance policy you take out will be more expensive if you smoke.

Insurers don't want to lose money by paying out a large lump sum to your family when you have only been paying your premiums for a few years, so they make your premiums much more expensive. The insurance company is then covered if you should die earlier than you expect through a smoking related illness.

We're not talking a couple of pounds of difference, but thousands and thousands over the life of your policy so you could be paying off your mortgage early or living much more comfortably if you didn't smoke.

You need to be smoke-free for a year to qualify for the 'non-smoker' rates, so when you quit, be sure to tell your insurer. Then notify them when you have reached a year without smoking, and ask them to recalculate their premiums.   At that point, you should also shop around to find the best non-smoking life insurance deals in the market.

Get a free, no-obligation Life Insurance quote here >>

Add Thousands to the Value of your House

If you're planning to move home in 2010, it's likely that you'll be showing potential buyers around your place.   If you've smoked in your house for years, you probably will not notice the pervading smell of cigarettes. However, the moment someone new steps over the threshold, they will notice and this could be extremely off-putting when they are trying to visualise themselves in a new home.

If you are planning to quit smoking, make sure that you also thoroughly clean the carpets, walls and furnishings before putting your property on the market because the smell of smoke will linger. If you are a committed smoker, also do the above, and make sure that you smoke in the garden from now on.

Read other top tips on selling your home by property expert Sarah Beeny >>

Home insurance

You may already know that health and life insurance will cost you more as a smoker, but were you aware that home insurance companies also charge higher premiums to smokers?   Households containing a smoker are up to 40% more likely to suffer a fire than those where nobody smokes, and as a result, insurers view smokers' houses as being in a higher-risk category of cover.

If you are not planning to quit smoking, you need to at least make sure that you have a working smoke alarm installed in the house, because the combined risk of smoking and no smoke alarm will cause your home insurance premiums to skyrocket.

Get a free, no-obligation Home Insurance quote here >>

Perform Better at Work

Research by stop-smokingforever.co.uk shows that the average smoker takes two "unofficial" cigarette breaks a day, lasting around 15 minutes each. This means that if you smoke, you're taking half an hour more than your non-smoking colleagues each day, and the company is paying for it. Statistically, smokers take 1.8 more sick days a year than non-smokers, which again, costs the company money.

If you're hoping for a promotion in the New Year, now might be the time to increase your work productivity by kicking the habit and those extra, unpaid breaks. By being healthier, you'll not only feel much better but you'll reduce your sick days (and those lunchtime doctor and dentist trips that can eat into your afternoon), and therefore come across as a more reliable employee and therefore a better candidate for that top job.

More spare cash

If you smoke a pack a day, this amounts to several thousand pounds a year.   Whether you cut down significantly or quit completely, you'll have as much as a few hundred pounds extra to play with each month when you're not spending your hard-earned cash on cigarettes.

You needn't worry that quitting is going to cost you a fortune either, as the NHS offers free help and support to smokers who are trying to quit, via their website. We're sure you don't need any help working out what you would do with £2,000 extra to spend a year!

Private Medical Insurance on the up despite the downturn

2009-05-10T23:00:00Z

According to the Association of British Insurers (ABI) in April 2009, the number of people with some form of private medical insurance in 2008 exceeded 7.3million, an increase of 2.7% on the previous year.

This comprises people who have health cover through their employers, those who have individual or family policies and those with Healthcare Trust arrangements.

These figures are indicative of the fact that as a nation we are living through a time of uncertainty. Far from insurance being seen as a luxury, insuring against illness or injury seems like a prudent decision when the rising costs of healthcare and long NHS waiting lists for treatment are taken into consideration.

Nick Starling, the Director of General Insurance at the ABI said ?PMI is good for companies and good for the economy because it enables employees to get back to work as quickly as possible. This is why there has been a continued rise in the number of people covered by corporate policies?. Indeed employers are increasingly realising that by investing in the health and wellbeing of their employees, they are reducing absenteeism and ensuring their workforce is generally happier.