Buildings & Contents – Guaranteed Cheaper!

We have been writing about the importance of protection during recent weeks.  Buildings and contents insurance is one cover which most people feel that they take seriously. 

 

Life cover and sickness / redundancy covers are not taken as seriously as home insurance as there is no legal obligation to take them out and they are also more complex to understand and purchase. 

 

If you have a mortgage against your home there is a legal obligation to purchase buildings insurance and note the interest of the lender on the policy.  This ensures the lender is made aware of serious claims such as subsidence.

 

To obtain a quotation for buildings and contents insurance is relatively simple.  There are a plethora of price comparison sites and direct to insurer websites to peruse at your leisure 24 hours a day. 

 

Although price is important when buying a home insurance policy, cover is much more important.

 

The cheapest policies should cover you in the event of a serious claim such as subsidence, storm damage or theft, they may not provide cover in the event of an accident or if you are mugged whilst away from your home.

 

You can quite quickly produce a quotation for your home insurance, but you should take more care ensuring you are quoting on a like-for-like basis. 

 

It is worthwhile taking some time to review your level of contents cover.  As you get older wealth accumulates and this is often in the form of possessions.  By logging the approximate value of your contents on a room by room basis, you may be surprised to hear you are under insured. 

 

If you are under insured, the consequences can be serious.  If you have a claim for £500 for theft of contents, and have contentscover for £15,000.  When the loss adjuster visits he estimates the true value of your contents to be £30,000.  As you are only currently insured for 50% of the true value the insurer will pay out only 50% of the claim value. 

 

The same is true for buildings insurance.  So, if the claim was for storm damage of £10,000, you might receive £5,000 (minus excess).

 

I believe it is worthwhile reviewing your protection arrangements to ensure you have no gaps in cover such as in the area of buildings and contents.  Kieron Bassett Financial Services offer fee-free advice to everybody in the area of protection.  This is an attempt to ensure you are getting the right policy and value for money during these difficult times. 

 

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 www.kieronbassett.com/cms.

 

Adam Elkin CertPFS

28 July 2008

 

Please see our website for the terms and conditions of the buildings and contents price guarantee.

Life Cover

On average 1,676 people die in the UK each day, and that by the time one in twenty children have finished full time education one of their parents has died.  Armed with such sobering statistics I would have thought families would make it a priority to at least have some basic life cover.  Unfortunately, this is not the case with a high percentage of families not having any life cover at all.

 

The reasons for not having any cover revolve around statements such as it will not happen to me because I am very healthy and I come from a longed lived family.  Alternatively, sometimes the need for cover is acknowledged but it is something that I will arrange tomorrow when I have more time, but tomorrow never comes.  The sad fact is that we are often prepared to spend money to insure against our washing machine breaking down as opposed to spending a similar amount to cover our lives.  If an appliance breaks down it is merely a minor irritation but loss of income as a result of a death can have a devastating effect on a family financially.

 

So, if you do start to value yourself at more than a washing machine how do you go about getting life cover.  Well firstly it needs to be explained life cover is the simplest form of protection product you can buy.  It is also the cheapest; it can have critical illness cover added but this extra cover can increase the premium or significantly reduce the overall amount of cover you can get.  If higher amounts of life cover are your priority then the critical illness portion may be sacrificed.  Life cover can be bought in two different ways level or reducing.  Level cover covers you for the same amount of life cover for the term of the plan.  Decreasing cover reduces each year sometimes by a fixed percentage amount say 5%, or if attached to a mortgage it follows the mortgage balance as it decreases.

 

There are some variations to the policies with guaranteed plans ensuring that the monthly premium you pay throughout the term of the cover remains constant.  Reviewable plans give the same cover at outset but are usually cheaper, however the premiums have the possibility of increasing during the term of the plan at the discretion of the life company.  You are also able to take out plans that increase each year to stop the initial figure being eroded by inflation, and finally for a small increase in cost you can make sure your premium is paid if you are unfortunate to be off work sick for more than six months.

 

The amount of cover and the term of the policy you takeout is governed by your individual circumstances and your pocket.  I firmly believe that it is better to have some cover rather than no cover at all and with premiums for as little as £5 per month there is no reason for not getting covered now.

 

I believe it is worthwhile reviewing your protection arrangements to ensure you have no gaps in cover such as in the income protection area.  Kieron Bassett Financial Services offer fee-free advice to everybody in the area of protection.  This is an attempt 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 www.kieronbassett.com/cms.

 

Kieron Bassett CertPFS

22 July 2008

Fannie, Freddie and good news from The Rock!

We have been concentrating on protection over the last few weeks and will continue with another episode later in the month. 

 

This week however, whilst I have been on holiday, there seem to have been plenty of mortgage related news stories for me to comment upon.  July is a good time to assess the current state of the market.

 

Let’s begin with a news round up.  The Bank of England resisted the urge to increase interest rates and they remained on hold at 5%.  This was against market expectations and we have seen marginal reductions in some lender’s interest rates.  It also appears that so long as wage inflation does not follow the short-term (?) increases in fuel and food prices, and inflation starts to return to the 2% target next year, we won’t need to increase rates.  This is good news for the mortgage borrower and is contrary to the US who will have to increase interest rates to alleviate inflationary pressures.  The effect of this will be compounded by the “recession” which seems inevitable in the US.

 

Big name lenders and mortgage banks are “hitting the wall” in the US.  IndyMac, previously one of the largest US mortgage lenders, had a run by depositors over an 11 day period in which time $1.3billion was withdrawn.  As a result the firm is now being administered by the Federal Deposit Insurance Corp.  The savers are entitled to their first $100,000 plus 50% of the remainder of their savings.  IndyMac will not be the only bank to suffer the same fate.

 

Fannie Mae and Freddie Mac buy mortgage debt from mortgage lenders.  They hold around 50% of the US’s mortgage debt, which totals approximately $12trillion.  They were set up by President Roosevelt and since that time have become publicly listed companies.  This is the first time the resolve of the US government has been tested to see whether they would help prop up these mammoth concerns.  They had no choice, without the vote of confidence the US government gave these companies last weekend, the US housing market would have gone into freefall.  Never mind the 20% fall in house prices they have already felt, 50% or more would have been a certainty.  Now however, confidence is starting to return as governments are willing to put their (our) money in to shore up the sector.

 

Good news this week for mortgage borrowers, Northern Rock, yes you read that right, Northern Rock have re-launched with some competitive products.  Halifax have been knocking spots off the competition over the last 3 months with their extremely competitive retention rates and other lenders have not wanted to, or have not been able to compete. 

 

Lender arrangement fees have gone through the roof, leading to an average remortgage costing maybe £1,000.  Considering that advantage interest rates are not so far away from standard variable rates, in many circumstances a deal is not appropriate.  I would also be shying away from shorter term deals where the fee is a much bigger percentage of the loan. (£1,000 over 2 years is £500 per year, whereas over 10 years it is £100 per year). 

 

Northern Rock have launched good products which address the problem above regarding fees. They have launched completely free remortgage packages with rates starting from 6.59% fixed for between 2 and 5 years.  Other lenders will definitely follow suit and now is a good time to start looking for a remortgage or purchase deal.  In this fast moving market it is imperative that you contact an Independent Financial Adviser who can advise and arrange the best mortgage for you with the minimum of fuss and disruption.

 

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

 

Adam Elkin CertPFS

15 July 2008

Income Protection

Income protection, sometimes known as Permanent Health Insurance covers you if you are unable to work due to sickness.  It is not to be confused with Payment Protection Plans that are often sold alongside mortgages.  The plans sold alongside loans are often sold with redundancy cover included within the policy and usually sickness cover for up to twelve months.

 

Income protection differs from mortgage related plans in that although it does not cover redundancy it typically covers sickness for as long as you are off sick.  So if you are unfortunate enough to be unable to work again due to illness the plan will pay until the end of the policy term, which can extend as far as age sixty five.  The policy is ideal for placing alongside your mortgage to cover your mortgage payments, but in addition you can add on extra cover to protect your standard of living if you should fall ill.  The amount you can cover for varies from provider to provider but is usually about half your annual income.  Also housepersons can access cover even though no earnings are shown It is accepted by many providers that the family unit would suffer financially if the houseperson became sick, so some cover is available.

 

Income protection plans are in my opinion superior to their mortgage protection cousins in that they can be tailored to meet your requirements and have a high degree of flexibility.  For example the Payment Protection Plan cover sold alongside your mortgage will finish when you have paid off your mortgage, whereas the Income Protection Plan can continue to cover you until retirement.  I believe this feature is valuable as just because you have paid your mortgage off it does not mean you do not need your income protecting, and as we get older we are more likely to make a claim. Also Income Protection can start to pay out when your company stops paying you sick pay, which could be for example after three months.  Deferring when payments start will not only meet your needs better but will make the policy more affordable as the longer you defer  the cheaper it gets.  However if you do need cover from the first day you are off work there are plans that can provide this facility.

 

I believe Income Protection is one of the most valuable insurances you can take out when you consider the statistics, with over 2 million people off work classified as long term sick.  The question has to be asked how would you manage to be able to maintain your standard of living if you were unfortunate enough to fall ill.

 

I believe it is worthwhile reviewing your protection arrangements to ensure you have no gaps in cover such as in the income protection area.  Kieron Bassett Financial Services offer fee-free advice to everybody in the area of protection.  This is an attempt 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 www.kieronbassett.com/cms.

 

Kieron Bassett CertPFS

8 July 2008

Critical Illness Cover

Critical Illness Cover 

As we continue our journey through the protection world, we come across critical illness cover (CIC). 

CIC is taken up less often than death cover or Payment protection insurance, but does offer very valuable benefits over and above those offered through sickness and redundancy covers. 

CIC pays out a regular income, or more commonly a lump sum should you be diagnosed with a “critical illness” during the policy term. 

Typically a CIC policy is taken out to repay a mortgage during the term, but can be used to provide a regular income in the event a life assured is unable to work following a diagnosis.  However, this type of cover is usually provided by Permanent Health Insurance, (PHI or Income Protection) which pays out if you are unable to work, not only following the diagnosis of a critical illness.

 CIC premiums have increased dramatically during recent years.  This is partly due to better diagnosis of critical illnesses.  Heart attacks, for example, can now be diagnosed with a blood test.  Also, more types of cancer are diagnosed earlier than previously, leading to better recovery rates for those who have been diagnosed. 

 As a result the definitions for critical illnesses have been re-appraised to more accurately reflect what is a critical illness in 2008.  If, for example, you are diagnosed with early-stage skin, breast or prostate cancer you may not be paid out if you took out your policy within the last few years, but an older policy will have the older definitions and you would be able to claim.

 A typical adult is five times more likely to be diagnosed with a critical illness than to die during their mortgage term.  But, CIC is very rarely taken out due to the cost of providing the cover.  I believe that you should budget for this type of valuable cover before you apply for the mortgage.

The cost of CIC reflects the risk the life company takes on, therefore it is 4-5 times more expensive than death cover.

For a full list of definitions please e-mail or ring me and I will send you the list, but the volume of claims occur in the following circumstances.  More than 50% of claims are for cancer, followed by heart attacks and strokes.  Alarmingly, children’s critical illnesses are the next most frequent (most policies will pay £25,000 if your child is diagnosed), with multiple sclerosis as the 5^th most frequent. 

There have been warnings in the Press regarding CIC policies not paying out when you are diagnosed.  The main providers of this type of cover all release their claims figures.  The general average is that 80% of claims are paid out.  Of the other 20%, half are not paid as the applicant has not disclosed a pre-existing medical condition when they applied, and the other half are as the condition is not considered critical.  (it is not listed as a relevant condition on the policy document) 

I recommend reviewing your protection arrangements to ensure you are happy with your current level of cover.  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.

 Adam Elkin CertPFS

30^th June 2008