Insurance World

If you’re lucky, you’ll get a life insurance quotation that you are happy with, progress to application, and get yourself insured within 48 hours at the original price quoted. Unfortunately this isn’t the case for 66% of applicants - who face delays and loaded premiums.

So why is this happening? Well, life insurance companies provide quotes based on the ‘perfect person’ – which basically means you must be 45 or under and in excellent health, have no hereditary illness in the family, work in an office and want no more than Ј250,000 cover. If you fall outside these strict boundaries, you can expect delays, and expense.

When you request an initial quote, you only have to provide a few details, namely your age, sex and whether you smoke. The insurer calculates how long you are likely to live, and uses that prediction to provide a quotation. This is what is known as their “Standard Terms”.

If you like the quote and want to apply, you’ll have to give them a lot more information. You can either fill the form out yourself or give the details over the phone, a service that many online insurance companies offer. It speeds up the process, and ensures that you don’t miss any important details out. Failure to include a detail that later on turns out to be important could invalidate your claim. They will then send the completed form for you to check and sign, so you need to be 100% sure that you have not omitted any details.

The insurers then use the information on the application details to make a more detailed analysis of your health and lifestyle, to try and predict any future concerns. If you have health problems of your own, you will instantly face loaded premiums, but they also look at more insidious issues such as your weight, alcohol and nicotine intake. Also if your father died of a stroke, or your mother from breast cancer, this will have an impact on their assessment of you.

Your lifestyle will also have a part to play. If you work in an industry where accidents happen, such as construction or farming, or if you have a dangerous hobby like paragliding or mountain climbing, your premiums will feel the heat. They will also ask if you regularly visit countries that have historically represented health risks for visitors, like Africa and parts of Asia. And even though the law doesn’t allow discrimination against same sex relations, the insurance companies will invariably ask you to have a full medical examination before agreeing to insure you.

Insurance companies have admitted that their list of questions has grown somewhat in recent years, and continues to do so. They say it’s to reduce the number of claims they reject, but whilst that may be partly true, the proportion of applicants facing loaded premiums has increased at a noticeable rate. A few years ago, it was more like 40% - but many of today’s insurers are loading premiums on 66% of applicants.

So just how much more will you have to pay? It’s impossible to say because it’s based on individual circumstances, but here’s an example to help illustrate. A 40 year old woman suffering from post-natal depression and receiving treatment for it was recently faced with a 50% increase on an initial quotation of Ј7.60, as was a woman whose mother had breast cancer. Overweight people also face higher premiums ranging from 50% to 100%, and in extreme cases - refusal.

So what can you do to avoid being charged these higher premiums? There is nothing you can do per se, other than avoid the insurance companies that give the cheapest initial quote. They are the ones that are most likely to have very strict medical criteria, because that’s their way of keeping their quoted prices at rock-bottom levels. Try a more expensive provider like Friends Provident and you may find that they are more lenient – in any case, it’s worth a try!

If you pay over the odds, you will be doing yourself a great disservice. Think about it, an extra Ј10 a month becomes an extra Ј3,000 on a 25 year policy. If you don’t have the time to get quotes and apply to different life insurance companies, talk to an online life insurance broker, they will be able to find a way around your particular problem to get you the cheapest quote possible. You will also benefit because of the competition on the internet – this means extra reductions as online brokers cut their commission.

Don’t do all the hard work yourself – let the professionals do it for you!

1. Mortgage payment protection insurance

This sounds great in theory - your mortgage is covered if you are unable to work for a period owing to illness or unemployment. Thankfully, these policies are optional, which is just as well since they are exorbitantly expensive.

For every pound policyholders spend on this cover, typically less than 20-25p is paid back in claims. The upshot is that the mortage market is making a whopping profit of around 80 per cent on every policy sold.

2. Credit card repayment protection plans

These are even more of a hair-raising con than mortgage payment protection. Once again, with a huge mark-up on premiums, payment protection insurance is of little value to people with better cover in place, such as income protection insurance, and it only covers the cost of low-priority debts.

So having the minimum payment made against your credit card bill would be little consolation if you couldn’t pay food and energy bills. When receiving quotes for a loan online some companies don’t ask whether you want to include PPI in your quote, but add it automatically.

3. Life insurance as part of a mortgage ‘package’

When taking out a mortgage, borrowers are expected to take out a life insurance policy. This is designed to pay off the outstanding mortgage loan in the event that the borrower dies while the loan period is still running.

One of the biggest scams in recent years is when mortgage providers or brokers try to include life insurance as an integral part of their mortgage package. You are under no obligation to buy this life policy and are free to shop around for cheaper premiums.

4. ‘Free’ travel insurance from credit card providers

Travel insurance is a must for those going abroad but “free” travel insurance policies from bank or credit card providers can often leave you dangerously under-insured.

Many of these polices only offer very basic insurance - for instance, they are likely to exclude cover if you travel to the United States, South America and more exotic locations. There will inevitably be no cover for skiing or other dangerous sports, either.

5. Travel insurance sold with holiday packages

Another common bugbear with travel insurance is policies sold by travel agents. Policies sold when a holiday is booked come with a huge mark-up. It might seem more convenient via the agent, but it only takes one simple phone call to set up a policy direct with an insurer yourself - and it’s much cheaper.

6. Extended warranties

When you purchase electrical goods such as a new hi-fi, washing machine, cooker or dishwasher, the retailer will inevitably give you the hard sell on an extended warranty. This is an area where the retailer makes money on high-margin protection products.

These warranties are extremely expensive - and in many cases a repair bill further down the line, if needed, could prove significantly cheaper than paying for a warranty you never use.

7. Credit card protection plans

A credit card protection plan allows you to protect your card from theft and misuse. The fee is usually around Ј10 a card. But given the amount of credit and store cards Brits like to carry around, you only need to have five cards and you are paying Ј50 in card protection alone. If you are going to insure your cards, insure them all collectively.

8. Third-party car insurance

Car drivers who are involved in a smash caused by a joy-rider or a driver without insurance or a licence cannot claim on another policy - and if they have only third-party insurance, they will have to pay for all their repairs themselves.

For younger drivers, third-party policies can often be the only affordable option as fully comprehensive premiums are so heavily loaded against them.

9. Ski insurance

Ski insurance policies often exclude off-piste skiing, but in many cases off-piste could actually mean a short unmarked path linking one ski run to another. You may unwittingly be negating your policy and having to shell out if you need to be transported down to a hospital for treatment.

10. Private medical insurance (PMI)

Private medical insurance (PMI), particularly budget plans featuring small print littered with exclusions, are rarely satisfactory. Often the conditions covered and the choice of hospitals offered for treatment will be restricted.

You could be paying out monthly premiums but when you need to make a claim, you may discover that the outpatient treatment you need (scans or physiotherapy) is not covered.

About Author vinay garg
Master copywriter Please visit: http://www.AllGoodArticles.com