Have you ever worked out how much you spend on insurance? Try totting up your premiums – we suspect you'll be surprised! You'll be even more surprised to discover that there's a probability that you've also duplicated some of the cover you're paying for. Cut the duplication out and you're certain to save money and get the best insurance.
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 don't fully understand what's covered by the policies we have, especially if the policies had been arranged for us by financial advisers and brokers.
A recent survey discovered that optional extras such as breakdown recovery and legal expense cover were frequently added to car insurance without checking whether the policyholder was already covered. It's also not uncommon to find that people with 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 Financial Ombudsman has confirmed this saying, “People often contact us when they find themselves over-insured. 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”. This indicates that the best insurance does not necessarily involve having a multitude of policies under one's belt.
There's also ample of evidence that some of us simply don't understand what we're actually insured for! For example, take the case of Amanda. 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 bank to find out if she could raise some cash by re-mortgaging. The adviser at the bank wisely asked her to bring with her, her life insurance policies so that they could be used to support her re-mortgage application. So imagine Amanda's surprise and delight when the adviser explained that her existing policies were not life insurance policies at all – they were actually critical illness policies with a considerable combined insured value. She was able to claim on these policies and the amount she received was sufficient to pay off most of her mortgage and her tax bill! In short, Amanda had the best insurance for her needs and didn't even know it.
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