Insurance World

Frozen squirrels, flying cows, invisible roundabouts and dogs with flatulence are some of the more freaky insurance claims around. Even house insurance isn’t always as straightforward as a leaking roof – how about roof damage caused by the downdraft of helicopter blades? It may sound like Mission Impossible but there are plenty of insurance claims that take the biscuit.

1)Furry friends

Forget humans, pets suffer from strange afflictions too. Some pet insurance claims aren’t as straightforward as a flea infection. Narcolepsy and flatulence are some of the more unusual ailments to bother our pooches. Although you’d be forgiven in thinking constant sleeping and flatulence were a given when it came to canine behaviour.

But the more unusual the complaint, the more costly it is to treat as it’s harder to diagnose than a straightforward dose of fleas.

2)Drive on the wild side

Even if it’s not some mysterious illness afflicting the nation’s animal population, they still get the blame for human trial and error. According to one top car insurer, freak animal accidents are one of the main causes of blame in bizarre insurance claims.

• A frozen squirrel got the heat for falling from a tree and breaking one driver’s windscreen.
• One herd of poor cows were pinned for licking paintwork from a car.
• Santa Claus must have been having an off day, but according to one parked motorist, a reindeer fell on his bonnet.
• A rather exotic case involved a zebra colliding with a car – in a safari park.
• Even the insect world is to blame – a wasp flew down one man’s trousers causing him to prang the car in front.

3)The cheek of it

Dubious claims against local authorities include a man insisting on a new pair of pants, after he claimed the closure of a bus station toilet led to him soiling his trousers.

One shoplifter even tried to sue after she fell down the stairs fleeing from the scene of a crime, and one motorist insisted he didn’t see the roundabout, despite the rather visible tree that featured in the middle of the roundabout.

4) Cat on a hot tin roof

One of the more unusual house insurance claims also involves our four-legged friends. A pet cat was sick on a TV and caused a house fire after the TV caught light. The property was seriously smoke damaged after Felix the cat’s unfortunate vomiting. Felix’s owner was left temporarily homeless, but don’t worry, Felix escaped from the fire unharmed.

5)Monkey business

Travelling can be full of adventure and of course exotic animals. Once more animals trump the top of the list when it comes to bizarre insurance claims – even when we’re on our holidays.

• One traveller’s imagination went wild when he asked his insurer if his travel insurance would cover any lost limbs in the event of a polar bear attack.

• Fraudulent claims include one couple blaming the apes on the rock of Gibraltar for pinching their camcorder – they later admitted they dropped it.

• One woman took her eye off the ball when she claimed five times for the loss of the same eye after various made-up mishaps.

Life insurance – what is it & how does it work?

Life insurance is the simplest, most popular and cost effective way to financially protect any dependants in the event of your death. While it won’t help those left behind to get over their loss, the benefit of a lump sum, in most cases tax-free, will guarantee your family aren’t deprived of funds during an already stressful time.

With the cost of life insurance at an all time low, now is the perfect time to arrange cover. For those in good health, a policy that was taken out six years ago can be replaced today for significantly less, despite the fact that being older, one is in theory at greater risk. The industry over-reaction to the threat of AIDS initially caused premiums to rocket skywards, but when the expected epidemic failed to materialise, costs fell rapidly from the mid 1990s onwards.

Life insurance premiums vary from person to person, with factors such as age, gender, current and previous health, lifestyle, term required, occupation and smoker status all having an influence. Risk is assessed with the use of what’s known in the industry as ‘mortality tables’ to determine the premium for a particular individual, to which a ‘loading’ may be added which takes further account of other factors relating to medical history and lifestyle.

Whole of life versus term life insurance

Life insurance can be split into two main types, known as ‘whole of life insurance’ and ‘term life insurance’. In essence, as the name suggests, whole of life insurance provides cover for the lifetime of the policyholder, whereas term life insurance provides cover for the duration of an agreed period in time. For all policies it’s crucial to ensure that premium payments are kept up to date to keep cover in place.

Whole of life insurance

Whole of life insurance tends to be the more expensive option, though often has the advantage of being more flexible. It can fulfil many purposes including personal protection, family protection and inheritance tax planning, and can be combined with a term life insurance policy to cover specific debts as required.

Typically, policyholders’ contributions are invested and life insurance benefits are ‘purchased’ using the investment fund. The fund’s performance, along with other factors, has a significant effect on the level of future benefits. As the policyholder’s age increases the cost of the insurance increases, thus reducing the sum in the investment pot. The investment element varies from insurer to insurer; some are more generous payers than others, making the expert advice of an insurance broker or independent financial adviser invaluable in choosing such a policy. Some plans require contribution until the policyholder’s death, some for a set period of time, and some up until a certain age is reached, with additional options available to cover specific illnesses or disability. The common factor throughout is that cover is maintained for the life of the policyholder, making whole of life insurance a very popular way to leave dependants a nest egg.

One great benefit of whole of life insurance is that the guarantee of a payout on the policyholder’s death, at whatever point in time that may be, removes much of the guesswork involved in other types of life insurance. As long as premiums are maintained, cover is assured. Although the more expensive option, it’s important to note that premiums are lower than those one would pay in later life by repeatedly renewing term life policies.

Term life insurance

A simpler option, term life insurance offers basic cover for a set number of years, usually at low cost. A term life insurance policy requires a regular premium payment and pays out a lump sum on the policyholder’s death providing this occurs within the term of the policy. Death outside of the term to which the policy applies won’t result in a payout, meaning the loss of any investment made, making it particularly important to be sure that cover is adequate and the term is appropriate.

Some policies can be extended to provide critical illness cover; full disclosure of all medical conditions, existing and historic, is vital when arranging this to avoid a denial of payment just when it’s needed most. It’s also imperative to be certain exactly which conditions the policy covers, as insurance companies are notoriously specific as to the illnesses they’ll pay out for!

Term life insurance cover can be further categorised into these types:

Flat-rate (or level) cover - offers a set amount of cover for the policy term, fixed from the outset.

Decreasing (or mortgage protection insurance) cover - cover decreases over the term of the policy, often inline with a diminishing mortgage debt.

Family income benefit – pays out a regular income rather than a lump sum during the policy term.
Increasing term assurance - premiums and benefits increase each year, usually in line with inflation, allowing the protection of a lifestyle.

Convertible term assurance – gives the option to convert to a whole of life policy without giving new information about your health.

How much cover do I need?

It’s important to correctly identify your dependants’ financial needs to establish just how much life insurance cover to arrange. A general rule is to choose a policy providing at least ten times your salary, but more may be appropriate, with the amount varying depending on how you intend it to be used. Basically you decide how much you want your dependants to receive in the event of your death, and your premiums will be determined accordingly.

Don’t overlook factors like:

• Mortgage repayments
• Replacing the primary earner’s salary
• Replacing childcare
• Education expenses
• Outstanding debts
• Support for a business partner

What do I need to look out for?

Before signing anything, look carefully at the terms and conditions of your proposed life insurance policy giving particular attention to any regulations pertaining to payouts. Some policies may not, for example, pay out if death is caused by participation in certain dangerous sports or activities.

In the case of index-linked policies which allow for economic change, it’s important to establish whether the policy is linked automatically or whether there’s the need to opt-in to linkage each year; failure to do so could result in being locked out of future linking.

Though life insurance payouts are usually tax-free, there are circumstances where taxes will apply. A life insurance policy can be placed ‘in trust’ to protect revenue and provide payment more quickly, though this is a complex issue which needs professional advice for clarity before proceeding.

A joint-life policy is a popular and often less expensive option for couples which covers the two of them simultaneously, with options for payout on a first-death or last-survivor basis.

How much will it cost?

The cost of each different policy offered by a life insurance company varies widely, and depends on a number of factors: the type of policy, the length of the policy term, the size of the death benefit, the flexibility of the policy, number of people covered by the policy and so on.
The only certainty is that the longer you delay getting life insurance, the more expensive the premiums will be!