Redundancy Cover – Free Advice

Redundancies are now on the increase after many good years in the jobs market.  Recent monthly figures show that unemployment has risen by 38,000 and it is reasonable to expect this trend to continue as the economy slows down.  Fortunately, insurance is available that will pay out if you are made redundant or fall sick.  This type of insurance is known as Payment Protection Insurance and is sold alongside loan and credit card deals.  Unfortunately, there are growing fears that bad publicity about this type of insurance is encouraging people to either reject this type of insurance or cancel the cover they have in place.

The take up rates for Payment Protection Insurance to protect mortgages is less than 20%.  This very low rate is I believe due, in part, to the feeling that it is difficult to claim on these plans.  The Competition Commission has recently reported that policies had been widely mis-sold, with about a third of all policyholders not being in a position to claim due to their employment or medical situation.  I believe the other main reason for the lack of interest in this policy is that in good times we do not feel vulnerable.  We are able to find jobs easily and the increase in equity in our properties makes us feel wealthy, to the extent that we feel that in the unlikely event of prolonged sickness we would be able to cope.

As times are changing with food prices increasing, job cuts being announced every day and house prices falling, I believe we are losing our sense of security and well being.  So, perhaps we should reconsider Payment Protection Plans.  After all if you are made redundant or become sick the state provides very little. Unemployment benefit is about £60 per week and the State only steps in to help after nine months.  But even this assistance is only paying the interest on your mortgage to a maximum of £100,000, and is dependent on the income coming into the house.  For example, if your spouse is still working you may not be eligible for help.

Payment Protection Insurance can typically cover unemployment and sickness for up to 24 months.  So it is a potentially very valuable insurance in keeping a roof over your head during a very stressful time.  However, it does suffer from a poor claims history as mentioned earlier, so what can be done to change this?  I believe that it is important for people who already have these policies to take Independent Financial Advice to ensure that the policy they have is both effective and value for money.  For those who do not have cover it is worthwhile considering this type of insurance in the environment we find ourselves in.  I believe the key to having the right policy that you can claim on is by ensuring you consult an Independent Financial Adviser who will tailor the policy to your needs.

Kieron Bassett Financial Services offer fee-free advice to everybody in the area  of protection.  This is an attempt by us to ensure you are getting the right policy and value for money during these difficult times.

Kieron Bassett Financial Services have two IFAs.  Contact us on (01524) 832057, via e-mail, info@kieronbassett.com, or log onto our website.

Kieron Bassett CertPFS

24^th June 2008

Be Aware Of Insurance, It Could Be A Life Saver, and Buildings & Contents Price Guarantee

All the signs are there that the problems we have been experiencing with inflated food and oil costs and the economic slowdown will continue.  This means that there will be increased pressure on household budgets and a raised awareness of problems such as redundancy and sickness. 

When the economic outlook is rosy there is a tendency to neglect insurances due to the feeling that times will always get better rather than worse.  The reverse is true at the moment. 

There are many ways of protecting yourselves throughout the coming years.  You may already have some of the covers I am going to detail below, but now is a good time to contact us for a full review.  Let us make sure that the cover you have is affordable and appropriate.  And, if you have no cover, for a few pounds a week you can make sure that your future is looked after rather than leaving it to chance.

Most people start their protection plan with life cover.  This can be in one of two forms, level or decreasing.  If the cover is designed to repay a mortgage on death, then a level policy is needed for an interest only mortgage and a decreasing policy for a repayment mortgage. 

 A minority of people choose to include critical illness cover (CIC) with their life assurance policy.  CIC is also level or decreasing and pays out if you are diagnosed with a serious illness such as cancer or heart disease.

Mortgage Payment Protection Insurance (MPPI) cover intends to assist you with your mortgage payments should you be signed off work or be made redundant.  Typically this policy starts paying once you have been absent for 30 days and ceases when you return or after 12 months, whichever is shorter.  There are now policies with more flexible features.  For example Liverpool Victoria have a product which pays out indefinitely for the sickness element of the policy.

Income protection, known as PHI, pays out a percentage of your salary, typically 50%, until you return to work following illness or disability.  This plan is designed to allow you to maintain your standard of living following a long-term illness.  The payments can be used to pay a mortgage, but could just as easily be used for everyday living expenses.

Buildings and Contents insurance is the policy the majority of us will have.  There is a trend now to review your buildings and contents insurance arrangements annually.  There are a multitude of insurers online and also comparison sites.  We feel that these sites do not ensure you remain with a competitive policy offering the same or better terms.  Therefore, we have introduced our own proposition. 

We guarantee to beat your renewal premium and in addition we will ensure that the policy we recommend is at least as good as your current policy.  Each year we will review your current policy to make sure you remain with a competitive insurer at a competitive price.  If we do not beat your existing renewal premium we will give you £10 cash.

Reviewing your insurance arrangements through an Independent Financial Adviser is worthwhile.  They will discuss your current products and recommend areas where you can make savings or are under-insured.

Kieron Bassett Financial Services have two IFAs.  Contact us on (01524) 832057, via e-mail at info@kieronbassett.com, or log onto our website.

 Adam Elkin CertPFS

16 June 2008

The terms for this deal are as follows:  The policy must be a residential buildings and/or contents policy, or a residential let property buildings policy.  We will ensure the new policy is of the same or better standard than your existing policy.  You must make an appointment with either me or Kieron as we want to ensure we are quoting on at least a like for like basis.  At the appointment we will discuss your insurance arrangements and you will have the opportunity to review any of your other arrangements.  To the meeting you should bring your renewal schedule showing the terms of the policy and the renewal premium.  You must have at least 3 consecutive claim free years.

Bradford & Bingley – Top Hats to Cloth Caps

Last week Bradford and Bingley issued a profit warning after discovering that mortgage arrears for the month of April were higher than expected and the outlook for the rest of their year was gloomy.  At the same time the Chief Executive resigned and all this was happening as they were trying to raise money via a rights issue.  As expected the Bankers arranging the £300 million rights issue started to consider pulling the issue, due to a material adverse change in the health of the company.  Fortunately, Texas Pacific Group stepped in and bought a 23% share in the Bank at a discount and restored some confidence in the Bank.  The rights issue was able to proceed at a lower price and a total of £400 million is now being raised due to the difficulties they find themselves in.

Anxious investors and borrowers will be asking themselves is this another Northern Rock in the making or has disaster been averted by the prompt actions of the board?  Northern Rock and Bradford and Bingley have many similarities in that they are former Building Societies coming from a regional base.  In addition, they have grown fast since listing on the stock market and pursuing what could be argued a high risk strategy in order to gain market share.  Bradford and Bingley have a 20% share of the buy to let market in the UK, with 59% of its lending being in this area and 22% in the self certification market.  As conditions in the economy get tougher, I expect mortgage arrears to grow generally and particularly in the areas that Bradford and Bingley operate in, as they have some of the most vulnerable borrowers.  Savers should be aware that if Bradford and Bingley fail, the first £35,000 is guaranteed by the Government.  If you have more than £35,000 with Bradford and Bingley, or indeed any financial institution, it could be worthwhile spreading it around just to be on the safe side.  Borrowers, I believe, will only encounter difficulties when they are coming to the end of their deal.  I expect Bradford and Bingley to go the way of Northern Rock and be reluctant to compete on rates on renewal, unless something dramatic happens such as a takeover or a sea change in their fortunes.

This type of development is causing real problems in the market as more lenders are effectively withdrawing from the market.  It appears to be putting pressure on the existing players who have limited capacity to lend.  This will mean that possibly millions of borrowers at the end of their deal will be locked in on standard rates that they cannot afford.  I believe that consolidation is required in the market with the strongest taking over the weakest.  Hopefully, the savings made will allow the market to function.  At the moment, I believe the mortgage market is paralysed with only a small percentage of customers accessing competitive deals, and unless this changes quickly, confidence will drain away and it will be many years before the market returns to normal conditions.  Perhaps the Government can give a lead through Northern Rock, the state owned lender and provide much needed liquidity; after all, it is our money anyway.

Although the mortgage market remains difficult, it is imperative that an IFA who specialises in mortgages is consulted to ensure you get the best deal possible.

Kieron Bassett Financial Services have two IFAs.  Contact us on (01524) 832057, via e-mail, info@kieronbassett.com, or log onto our website.

Kieron Bassett CertPFS

10 June 2008

 

Inflation – Friend or Foe?

Rising oil and food costs, at a time when mortgage rates seem to have been steadily rising, are putting ever increasing pressure on our already strained pockets. 

The price of diesel is now 126.9 pence per litre at Morrisons.  The price a year ago was more like 90 pence per litre, a rise of over 40%.  Goldman Sachs, a leading global investment bank, expect the price of a barrel of oil, currently $135, to reach $200. 

I was chatting to a local butcher last weekend.  He told me that the price of virtually all meat and eggs to him has increased by around 50% in the last 6 months.  He has not been passing the whole rise onto his customers, but unless wholesale prices fall, it is inevitable.  He also expects supermarkets to start passing on the full effect of these price rises within the next few months. 

The above can only mean continued price rises over the coming months, and a continued upward strain on inflation. 

Inflation is the crux upon which the UK’s economic policy and success is measured.  The benchmark is 2%, but we are heading toward 4%. See Monetary Policy Committee. 

If wage rises do not keep up with inflation, we all have, in real terms, less money in our pockets each year.  This could be the final nail in the coffin for a significant percentage of homeowners as they struggle to meet the everyday costs of living. 

On the other hand, inflation could be our friend over the coming years.  A high level of inflation actually reduces the value of our debt year on year.  The level of your debt, even if it remains level, in real terms falls each year.  High levels of inflation, accompanied by matching levels of earnings increases, erodes the value of your debt more quickly than in low inflationary environments.  

Although the cost of your everyday living expenses rises, the cost of servicing your mortgage and loan payments remains level, given stable interest rates.  As your monthly income has also been rising with or above inflation, your overall costs reduce as a percentage of your income. 

This has the effect of eroding the value of your personal debt.  However, it is a risky policy.  If wage rises do not keep up with inflation, consumers could find themselves worse off, rather than better off each year. 

Also, to try and keep inflation under control, Monetary Policy will often increase interest rates, in effect lessening the potential positive effect of high levels of inflation. 

There are uncertain times ahead, and to better understand the potential impact this may have on your pocket, you should consult an Independent Financial Adviser (IFA).  You can find IFAs online at unbiased.co.uk. 

Kieron Bassett Financial Services have two IFAs.  Contact us on (01524) 832057 or via e-mail, adam@kieronbassett.com. 

Adam Elkin CertPFS

3^rd June 2008

Kieron Bassett Financial Services – who are we?

                                                  

Kieron Bassett Financial Services are one of the most dynamic, yet caring truly independent intermediaries, providing clients with a first class service in the areas of mortgages, pensions, life assurance and lump sum investment. We have specialist advisors with first-rate knowledge. Kieron Bassett Financial Advisers are open 6 days a week to assist you “For All Times In Your Life”.

Kieron Bassett Financial Services are located in Morecambe’s town centre. We are near to Lancaster, Heysham, and Carnforth, and will travel to your home throughout the North and Northwest of England. With clients worldwide, we can cater for your needs, be it face-to-face, over the phone, or via e-mail at adam@kieronbassett.com.

Visit our website.

We place mortgages with every lender, be they obscure such as the Kent Reliance Building Society , or more mainstream such as Halifax.

For investments we remain independent, dealing with firms such as Fidelity, Mellon-Newton and M&G among many others.  We especially like wrapping client’s investments using Cofunds as this allows the ISAs and unit trusts to be viewed as a portfolio using  cofunds‘ planning tools.

Home insurance is a very strong area of ours.  We have access to a wide variety of insurers such as Norwich Union, HIGOS, Spectrum Abacus and Congregational & General.  We guarantee to beat customer’s renewal quotes for residential buildings and contents insurance.

Visit our website or send me an e-mal to adam@kieronbassett.com.  Our phone number is 01524 832057.

Adam Elkin CertPFS

6th June 2008