5 min Read
03 Jan 2013

Written by Darren

I’m an Independent Financial Adviser and I’ve been in the industry since the 90’s

I have always had a particular interest in Investment, including Pensions.

FPC qualified since 1999 I have now been qualified at the new Diploma level since July 2011.

I totally support the FSA initiative of raising standards in general and building a code of ethics for advisers.

My only regret is that the move to fee based advice in 2013 may put off those who don’t usually seek the services of advisers, and sometimes these are the people that need us most.

That’s why I’m happy to offer my services to Money To The Masses!

More about Darren

Why now is the best time to buy Life insurance

EU Gender Directive has pushed up premiums – but there is hope

You may have already read about the new EU Gender Directive, which, as of 21st December 2012, prohibits insurance companies from offering different premiums based on whether the applicant is male or female. With the press scare mongering as to what the financial impact for consumers would be there was a mad rush to buy life assurance in the days leading up to the 21st December.

While it’s true that in general it means that rates for many policies will be higher for both men & women, market forces will almost certainly reduce the impact of this once the market has adjusted.

But don’t delay buying Life insurance in the hope that rates might go back down

Let’s assume you buy a new home and are taking on a big mortgage, say £150,000. You are married with 2 children, and decide to wait for rates to hopefully reduce before buying some life insurance to protect your mortgage, and therefore your family from being made homeless. What harm could there be?

  • For a start, time passes very quickly when you are busy, particularly after moving into a new home. Before you know it it may be 10 to 12 months later. Rates will be higher because you are older, possibly negating any rate reduction that has happened.
  • Plus rates may not actually reduce after all, meaning you now pay the higher rate for being older

But things could be WORSE!

  • If in 6 months time you visit the Doctor and he advises you that you have developed a minor illness, for example Hypertension (High blood Pressure). You then apply for Life insurance, because rates have dropped a little. But the medical condition has now increased your premium by at least half, making it more expensive than if you’d bought at the time of the mortgage.
  • Worse still if you are diagnosed with something more serious, like Cancer or Heart Disease. You would be unlikely to be able to buy a policy at all, and even if it is possible the premium would be perhaps 4 times higher than it would have been at the time of taking out your mortgage.
  • If you were to become terminally ill before taking out Life insurance, and eventually die, without your income to support them, and a massive monthly mortgage payment, your family would have to sell their home in order to survive.

Don’t be put off buying Life insurance immediately or reviewing your existing policy.

Ideally make sure that you get some good advice from a Financial Adviser to ensure you get the most suitable policy for you and your family.

There is NO penalty to you if you take out a life insurance policy and then cancel it later, in say 12 months time, because you have found a better deal. BUT the Insurer cannot cancel it on you. Word of warning here though, whatever you do you must NOT cancel your existing policy until the new one actually starts, as until it does premiums can be changed.

If you do suffer from a medical condition after taking out life insurance you will still be covered. It won’t even affect the premium that you pay as long as they are guaranteed. If in 12 months you decide to shop around and the medical condition means you would suffer a rated (or increased) premium on a new policy you can just stick with what you already have.

More importantly if the condition means that you would be declined for a new policy the existing policy would still be unaffected.

Looking for a financial adviser near you?

Do you need financial advice? An independent financial adviser can show you how to make the most of your money.

Simply find your nearest qualified and regulated adviser using the UK’s largest adviser search.

Comments

  1. Mohit Thakur January 28, 2013 at 6:09 am

    I think this is the right time. I don’t see any reason why not buy insurance right now. Everyone knows that life is uncertain. It’s not about time it’s what your financial status is. Insurance is a good idea whenever your death would leave your family with outstanding financial obligations.