Insurance World

According to recent life assurance research by Sainsbury’s Bank, many ex-smokers may be paying too much for their life insurance. They assert that during the past 5 years approximately 6.78 million people have given up smoking, however only a quarter of these people have informed their life insurance company.

Time requirements differ between insurers; however, many companies consider a person to no longer be classed as a smoker after one year following quitting. By contacting their insurance provider former-smokers can get themselves re-classed as a ‘non-smoker’ and potentially saving thousands of pounds over the term of their policy.

According to their estimates, this means that there are up to 2.2 million ex-smokers who could be wasting at least Ј126.72 million simply by not reviewing their life insurance requirements to show their healthier status and reflect that they are no longer a smoker.

David Picket, the life insurance manager of Sainsbury’s Bank said, “The health benefits of giving up are well known, and with a packet of cigarettes now costing over Ј5, the financial savings can also be substantial. However, once you’ve successfully quit, you could also make a saving in your annual life insurance premiums if you review your requirements.”

Most policies require ex-smokers to have given up permanently and it is possible that even a couple of cigarettes in the pub on a Saturday night can consequently invalidate cover; however there can be big savings available (over 30%) for those who have completely quit. But despite the potential savings that are available, most people do not think to update their life insurance policies and so lose out.

Over the last few years, increases in the level of competition, has lead to large reductions for potential policy holders, with basic term life insurance policies now costing as little as Ј5 per month for a young and healthy non-smoker.

Life insurance comparison site Moneynet has good news for existing policy holders too, “If you have existing Life Insurance Policies which were taken out some time ago it could be worth considering a change. Most Life Companies have considerably reduced their premiums over the last few years to take account of longer life expectancy and the advances in medicine.”

The costs of life insurance can vary significantly depending upon age, lifestyle and occupation, as well as between different life insurance providers, as not all providers evaluate the levels of risk to be insured in the same way. The ease with which it is possible to check the difference in insurance premiums between providers through the financial information site The Motley Fool, Moneynet, or countless others which have sprung up in recent years, has also lead to increases in public knowledge and competition within the industry further driving down the costs.

While the news seems to be good all round for consumers it must be noted that as with all financial decisions, changing insurance cover can be complex as the number of providers and different products increases and the costs of making the wrong decision could prove serious. It should be noted that levels of cover can vary widely and therefore a professional independent financial advisor should be sought if in any doubt regarding a products suitability.

Disclaimer:

All information contained in this article, is for general information purposes only and should not be construed as advice under the Financial Services Act 1986.

You are strongly advised to take appropriate professional and legal advice before entering into any binding contracts.

Useful resources:

Life insurance comparisons - Moneynet ( http://www.moneynet.co.uk/insurance/index.shtml )
Financial information - The Motley Fool ( http://www.fool.co.uk/insurance/insurance.htm )

Universal Life Insurance is a type of insurance policy that not only provides protection in the event of the insured’s death, but it also serves as an investment option. It may earn money market interest rates. It’s flexible and allows you to increase or decrease the amount of insurance coverage you need throughout the policy term. Although it is flexible, there are certain parameters you must follow. The policy limit may not be decreased beyond a predetermined amount, and increasing the coverage may subject you to underwriting requirements. Always be aware of your policy’s terms and conditions.

How does it work?

With a Universal Life policy you are in control of the amount and how often you pay the premiums.

• You have the option to make lump sum payments which will increase the cash and death benefit value of your policy. The interest on the cash value of the policy grows tax-deferred.

• You may also, at times of financial hardship, lower the premium amount you pay. Realize, however, by doing this, the face amount of the policy will change because the difference between the minimum monthly premium and the lower amount you pay is taken from the policy cash value. Be aware that most companies, if not all, include an expense charge for each premium payment.

• Withdrawals – You may withdraw money from the cash value of the policy. Companies may have limits as to how many withdrawals you may take each year and what the minimum amount can be. Each withdrawal may be subject to fees or charges.

Rates:

Rates vary depending on the company. Some companies guarantee that the account value will earn interest at the company’s current interest rate. Other companies have come out with policies where rates are guaranteed, regardless of the interest rate the insurance company pays.

The best advice is to shop around and always know what’s in the fine print.