Episode 417 - On this week's show I talk about the important numbers and key dates that everyone should know when it comes to their personal finances. I then take a look at a number of different insurance products and reveal the latest claims statistics, as well as how you can increase your own chances of making a successful claim. Finally, Andy talks about some of the medical conditions that could result in a £1,000 fine if you fail to report them to the DVLA.
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Abridged transcript of Episode 417
Personal finance numbers everyone should know
Below is a list of some of the personal finance numbers and dates, discussed on the podcast, that everyone should know when it comes to their own finances:
Mortgage
- Current interest rate on your mortgage
- Type of mortgage deal (fixed-rate, variable, discounted etc) and the deal end date
- Standard Variable Rate (SVR) that you would default to after the deal end date
- Full term of your mortgage
- Outstanding mortgage balance
- Early repayment charges (ERC)
- Overpayment percentage allowed without incurring ERCs
Net and Gross Pay
- Gross pay (before deductions)
- Net pay (after deductions)
- Hourly rate of pay - if you don't know your hourly rate then divide your annual gross pay by 2,000 assuming you work 35-40 hours a week. An hourly rate is useful in determining the value of items you may be looking to purchase.
Sick Pay
- Number of weeks of sick pay specified in your employment contract
- Statutory Sick Pay entitlement
Survival Funds/Emergency Funds:
- Total house bills and fixed expenditure (such as car finance or mortgage)
- Minimum amount of money needed to survive (i.e. the amount that will cover all necessary bills including a budget for food
- Discretionary spending (or surplus income over and above your minimum amount needed to survive
- Savings and investments contribution
- Cash buffer and its duration
Credit Score
- Know your credit score and monitor your credit report with each of the three major credit rating agencies (Equifax, Experian & TransUnion)
- Check your credit balances on credit cards and loans
- Minimum monthly repayment amounts and interest rates on all credit cards and loans
- Overdraft limits and usage
- Credit limit usage (aim for 15-25% utilisation)
Liquidity
- Determine how much money you can access quickly without penalty (including savings, investments, credit)
Pensions
- State pension age
- Desired pension age and scheme retirement ages (for final salary schemes)
- Contribution rates (employer and employee)
- Estimate retirement income using pension calculators (see resources section below)
- Percentage return needed to achieve retirement goals
Investments
- Total amount invested
- Charges per year (including financial advice, platform fees, underlying funds)
Savings Rate
- Determine how much you are saving for the future compared to your take-home income (including pension, investments and savings accounts
Net wealth
- Total assets minus liabilities (including debts and mortgages)
Insurance claim success rates & mistakes
In the resources section at the foot of this article you can find a table with the claim success rate for each type of insurance policy.
Reasons for claim rejection by insurance policy type:
Pet Insurance:
- Claims for uncovered items
- Incorrect pet details
- Claims made outside of the time period
- Exceeded the vet fee limit
- Pre-existing conditions not covered
- Failure to keep up with pet vaccinations
Home Insurance:
- Wear and tear claims
- Incorrect information during policy purchase
- Lack of due care
- Non-disclosure of facts
- Late claim submission
- Failure to disclose home modifications
- Failure to disclose ongoing work on the house that results in a claim
Travel Insurance:
- Lack of required documentation
- Withholding medical conditions
- Claims resulting from excessive alcohol or illegal drug use
- Unattended baggage or personal items
- Traveling against FCO or WHO advice
- Holiday duration exceeding the allowed period stated in the policy terms and conditions (often 30 days)
Car Insurance:
- Non-disclosure of pre-existing medical conditions
- Misstating vehicle use
- Misstating parking location
- Fronting (main driver not being the policyholder)
- Grossly underestimating annual mileage
- Failure to declare vehicle modifications
- Failure to provide dashcam footage as evidence in the event of a claim if a dashcam was declared when taking out the policy
Income Protection:
- Not meeting the deferred or waiting period when making a claim
- Non-disclosure of relevant medical history or conditions
Critical Illness insurance:
- Non-disclosure of relevant medical history or conditions.
- Not meeting the required definition of a critical illness
Life Insurance:
- Non-disclosure of relevant information
Resources:
Insurance claim success rate by policy type:
| Insurance Type | Claim Success Rate (% of claims that are accepted) |
|---|---|
| Car Insurance | 97% |
| Life Insurance | 96.9% |
| Critical Illness insurance | 91.6% |
| Travel Insurance | 83% |
| Income protection insurance | 81.6% |
| Home Insurance | 77% |
| Pet Insurance | 63% |
Note: Success rates include only claims that were submitted, and walkouts (those who enquire about claiming but decide to not proceed) are not considered in personal protection policies' success rates.
Links referred to in the podcast:
