Summary

Youd be surprised how many of us inadvertently duplicate insurance cover ( home insurance )- and its a total waste of money. This article explains.

 

Insurance. Duplicated insurance wastes money.

 

Author: Michael Challiner

  (car insurance )

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Have you ever worked out how much you spend on insurance? Try totting up your premiums - we suspect youll be surprised!

Youll be even more surprised to discover that theres a probability that youve also duplicated some of the cover youre paying for. Cut the duplication out and youre certain to save money.

Lots of people have insurance cover for legal expenses, loss of income, theft, even death, without even realising it. This can arise because many of us dont fully understand whats covered by the policies we have, especially if the policies had been arranged for us by financial advisers and brokers.

In a recent survey, The Financial Services Authority (FSA) discovered that optional extras such as breakdown recovery and legal expense cover, were frequently added to car insurance without checking whether the policyholder car insurance hub was already covered. Its also not uncommon to find that people with Permanent Medical Insurance have duplicated their cover via payment protection policies taken out specifically to cover their monthly payments on mortgages, loans and credit cards. The point is that if they claim on their Permanent Medical Insurance, their payout will be reduced because part of their claim is also insured through their payment protection policies - so their payment protection insurance is really a waste of money. (secured loans)

The Financial Ombudsman has confirmed this saying, "People often contact us when they find themselves over-insured. ( great loans articles ) They often do not realise until they make a claim that they have been paying for a policy that provides very little, if any, benefit".

Theres also ample of evidence that some of us simply dont understand what were actually insured for! For example, take the case of Amanda Lariviere from West Yorkshire. Amanda, aged 42 and mother of two, is recovering from ovarian cancer and had an allergic reaction to chemotherapy which kept her off work. Out of the blue she received an unwelcome tax bill so she decided to visit her building society to find out if she could raise some cash by re-mortgaging. The adviser at the Society wisely asked her to bring with her, her life insurance policies so that they could be used to support her re-mortgage application. Life Insurance Shop - uk articles on life insurance So imagine Amandas surprise and delight when the adviser explained that her policies with Norwich Union and Scottish Provident, which had been costing her £80 per month, were not life insurance policies at all - they were actually critical illness policies with a combined insured value of £100,000. She was able to claim on these policies and the £100,000 she received was sufficient to pay off most of her mortgage and her tax bill!

Heres some typical insurance policies to check out. (secured loan)

 

Critical Illness Insurance

Critical Illness insurance is often sold as an optional extra within a life insurance policy. In fact thats usually the cheapest way to buy it. However, some enlightened employers already provide critical illness insurance as part of their employment package. Ask your employer if you are one of the lucky ones!


life insurance

Some employers also provide life insurance cover within their pension schemes. Its called death-in-service benefit and typically pays out a tax-free lump sum worth 3 to 4 times the annual salary if the employee were to die whilst employed by the company.

Permanent Medical Insurance and Payment Protection Insurance

Permanent Medical Insurance (PMI) is also known by some people as Income Protection Insurance. PMI pays out the insured monthly sum if the policyholder is off work due to illness due to one of a wide range of specified illnesses - and some policies will even pay out during redundancy. PMI policies pay out indefinitely or at least until the policy comes to the end of its insured term. (home insurance)

Few appreciate is that PMI actually eliminates the need for Payment Protection insurance - the sort of insurance frequently sold alongside loans, credit cards and mortgages to maintain monthly payments if you are off sick, have an accident or are made redundant. Indeed, you cant make a claim against more than one policy for the same event - only one policy will agree to pay out! (All the others will reduce their payouts to the value of the money you are receiving from your other policies)

 

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