The average UK household spends more per year on the lotto than on life insurance cover.

Only 41% of people in the UK have life insurance cover, while 68% of people play the lotto and gamble in various other ways. This means that while only 20m people in the UK have a life cover policy, some 34m gamble, according to Aviva.

The monthly average household spend on the lotto and on gambling is £13.80, while the cheapest life insurance cover can mean a life cover policy that costs just £5 a month.

Aviva claimed that, if most people believe they stand a better chance of winning the lotto than of benefiting from life insurance cover, they are sadly mistaken – and by a long way. Devoting cash to gambling, rather than to the best life cover, could be like ‘playing Russian Roulette with your loved ones’ security’.

While only 1 person in 14 million wins the lotto, 1 in 3 people die of cancer, and 1 in 5 people die of heart disease.

Aviva pointed out that we are much more likely to be killed by a shark (odds of 3.2m to 1) or be struck by lightning (258,000 to 1), than to land that elusive lotto windfall.

“People know that protecting themselves and their family is extremely important, but many people wrongly think it’s too expensive, and delay life insurance. People gamble in the hope they may win the lottery, but put off life insurance thinking it won’t happen to them, when it is one of the unfortunate guarantees in life,” said Louise Colley, head of protection at Aviva.

Would you like to learn more about life insurance cover? Make a life insurance enquiry or ring freephone 0800 678 5929 now.

Some of the ancillary benefits now included in life insurance cover and critical illness insurance can be a
considerable factor in deciding which policy is best for you.

For new parents, for example, Aviva is now offering free life cover of £10,000 to those who contact the company before their child is 6 months old. The free cover then runs until the baby’s first birthday.

Many of the larger insurers, including Aviva and Prudential, include cover for your children, when you take out a critical illness insurance policy. This provides your children with critical illness insurance free of charge until they turn 18. Around 2% of claims for critical illness relate to children, and policies generally include conditions often associated with the young, such as leukemia.

Staying with the area of criticial illness insurance, LV= offers critical illness and income protection customers
who make a claim some attractive options, once their claim is complete. Their Extra Care service offers customers oncology, cardiology or neurology care, as well as access to therapeutic, physio or counselling expertise.

Those who buy life insurance cover through Scottish Provident are also offered the Lifeline service, which offers access to experts giving life and health-related information relating to legal issues, employment, and counselling services.

Bright Grey offers its Helping Hand service, which give customers access to a personal nurse adviser. This advice is also available to your partner and children, even if you have divorced since taking out your life and critical illness insurance policy.

Aside from pure life and critical illness insurance, there is another useful option for parents contained in the income protection insurances by Royal Liver. A lump sum of four times your gross monthly income protection benefit (up to £25,000) is available to parents who want to give up work to care for a seriously ill child.

Insurance specialist LifeSearch, which highlighted these optional services, pointed out that ‘a good financial
adviser will be able to identify the most suitable policy for a client that many direct sellers just don’t have the expertise to do.’

PruProtect has introduced a new personal insurance product which combines critical illness insurance with private medical insurance.

Critical illness insurance provides a tax-free lump sum payment when the policyholder is stricken by a defined range of critical illnesses, from a long list including heart attack, stroke, cancer, or multiple sclerosis. While some insurers have traditionally demanded that some illnesses must be of a strictly defined severity in order to validate a claim, PruProtect’s Serious Illness Cover acknowledges extreme or mild severity, and makes a proportional payout in either case. In other words, claimants for a very mild heart attack may still receive a payout, albeit for a smaller amount, where other insurers would have completely turned down their claim. The product is seen as more customer-friendly, as it is less likely that claims will be turned away.

Now PruProtect offers a combination of this critical illness cover with Pru’s Private Medical Insurance (PMI) cover, and at a discount of 25% on the private medical cover, when taken in the bundled product.

The ‘Health Cover Optimiser’ policy offers cover for a critical illness but also for medical or hospital costs. Customers can take either a lump sum payment for a qualifying critical illness, and receive no costs from the private medical insurance, or they can take a smaller lump sum from the critical illness cover, and use the rest towards their hospital costs.

Are you properly insured to replace your income for your loved ones, if you have to give up work? Use our simple critical illness planner to check how much you would need, contact us online with an insurance enquiry or ring freephone 0800 678 5929 now

The cost to employers of providing life and critical illness insurance, and income protection insurance, in their employee benefits packages looks set to rise steadily over the next two years, according to a new survey by Aon Consulting.

The costs of life and critical illness cover have fallen over 2008/09 but only 12% of those insurers surveyed by Aon expected to be able to lower the cost of their lump sum life insurance cover this year – compared with 50% who expected to be able to lower their premiums last year.

Looking specifically at critical illness insurance, Aon found that not a single insurer expects the cost of critical illness insurance to fall in the short term, while 29% are expecting to raise their costs.

For death in service pensions the situation was similar, with 29% of insurers predicting they would have to increase their rates.

Income protection insurance produced the most emphatic response of all, with 50% of insurers surveyed saying they would certainly have to increase their rates.

The situation is unlikely to improve as insurers move towards 2012, when the introduction of the Brussels-driven Solvency II initiative will force insurance companies to increase their cash reserves. Solvency II has been passed in order to strengthen the general standards of capital adequacy, and provide a more stable business environment for all European buyers of life and critical illness insurance, and income protection insurance products.

“Employers and employees have had a relatively good ride recently, with the cost of some of the most basic employee perks decreasing. However, this year we are seeing more consensus amongst insurers that costs are likely to increase,” said Paul White, head of risk benefits consulting at Aon.

Aon Consulting’s annual survey of insurers and reinsurers covered companies with a combined group risk market of £1.5bn.

While the woman is increasingly the main breadwinner in the UK household, she fails to realise that this has created a need for her to take life and critical illness insurance, according to AXA.

Life insurance cover and critical illness insurance are the standard tools for protecting our income against illness or a tragic event. Despite this, women are failing to see their real value, AXA says.

Predictions are that by 2030, women will be the main breadwinner in 1 in 4 homes in the UK. Wage inequalities are also lessening, giving female earners a stronger position than ever before and also increasing their ability to buy life insurance.

For women with dependent children, AXA has found that 27% already pay the family mortgage, 30% are solely responsible for the main family bills, 25% pay for their children’s education, and 29% pay the childcare costs.

For women not working, the full-time ‘domestic engineers’ who take care of the children, their value to the household is £23,000, according to AXA.

However, only 38% of women have life insurance cover, and only 1 in 5 (18%) have critical illness insurance.

The figures also show why it makes such good sense for women to buy life and critical illness insurance – of those who do, 1 in 10 suffer a setback that enables them to claim before the end of their policy, according to AXA.

Of those breadwinners who do have insurance, most are woefully under-insured. The average value of their life insurance cover is £90,000 and their critical illness insurance £80,000, equivalent to cover just two years of the average working woman’s worth (which AXA calculates at £45,000 based on job salary plus real value of work done at home).

Who has not, at some time, read the warning that ‘the value of investments can fall as well as rise’? Despite this, over 1 in 5 stock market investors stated that they never take financial planning advice to review their fund investments, in a recent survey by the pensions and retirement division of Prudential. In response, Prudential emphasised the wisdom of regular financial reviews with the comment “It is staggering how few are seeking financial advice.”

The dangers of failing to seek financial planning advice are not limited to pensions and investments, however. Failing to review your financial plan may cost you thousands over your whole financial portfolio, from savings and investments, to personal insurance and your mortgage.

Here we look at these individual areas, to show how, by neglecting your financial planning, you fail to adapt your investments to market and other changes, as you build your financial plan. The flip side is clear: great savings are possible by streamlining your financial planning with regular reviews with your financial planner, and a very hands-on approach to your money.

Financial Planning Advice - Funds and Stock Markets

A financial adviser can show you, the client, any number of league tables charting the performance of the funds where your savings, investments, and pension may be invested. What may strike you is the fact that, year upon year, the leading funds in any sector may have changed, as market conditions and the fortunes of individual investments rise and fall. Your own attitude to risk may change over time, creating another impetu to review and realign your holdings. The advantages of financial planning are clear here – a very active investment strategy is crucial to keep your money where it is working hardest for you, switching if necessary out of an underperforming fund and into a better fund. In 2009, over 11% of investment funds were classified as ‘dog funds’, at the bottom of the market measured by performance. More shocking still, the poorest performers included some of the largest funds on the market*. The amount of money invested in dog funds in the UK more than doubled during 2009, from £7.2bn to £14.2bn, as more recession-hit funds sank into the dog fund category. Only those investors working with their financial planner could be alert to these developments, and act as needed to fine-tune their investments.

Financial Planning Advice - Pension Planning

Many pension savers forget that their pension savings are not simply held in a ‘pension fund’ – they are invested on the savers’ behalf by the pension fund manager. As a result, pension savings are, indirectly, very much a stocks and shares investment, and subject to the same short-term fluctuations as conventional investment funds. They can, therefore, also be monitored for maximum efficiency, and changed and switched to better performing funds if needed.  Visiting your financial planner to review your pension planning on an annual basis is crucial, to ensure that you are on track to achieve your desired income in retirement.

Of course, in relation to pensions, financial planning has a special and secondary meaning. For over half of the UK population, neglecting financial planning here means not having a pension set up at all – which was the case for 52% of the working population in 2009, according to Halifax. This situation has given the industry the phrase ‘pensions timebomb’, as the dreadful consequences of such a lack of financial planning will take their toll, not immediately, but in the decades to come.

Financial Planning Advice - Savings

Many savers, living their busy lives from day to day, put their financial planning on the ‘back burner’. This often means that they have large sums languishing in bank or building society accounts, where returns, in the current low-interest climate, have rarely been so low. Again, good financial advice would show savers that shifting this cash into Individual Savings Accounts (ISAs) would mean that no tax is payable on growth. Furthermore, both cash or stock market investments are available. Other tax-efficient options include Venture Capital Trusts (VCTs), which offer 30% tax relief on cash that can be invested for at least 5 years, and Enterprise Investment Schemes, which offer tax relief of 20% on savings invested for the shorter term of 3 years.

Financial Planning Advice - Mortgages

If you have had a mortgage for several years, you may be coming to the end of an initial mortgage deal. If you decide to stay with your existing lender, you may be moved to their Standard Variable Rate (SVR) of interest, which may or may not be the best deal for you. At this point, financial planning advice will make you aware of the various mortgages available to you. Mortgage holders working with their independent financial planner may decide to switch to a different mortgage deal with their existing lender, or check the whole mortgage market in search of a better mortgage deal. In the end, you may well decide to stay with your existing lender. If so, fine! There is a huge difference between opting to stay put based on good information, and opting to do so based on no information! 

There is intense competition between mortgage providers for the business of those with equity built up in their homes, and taking financial advice is key to taking advantage of that. In relation to mortgages, the advantage of regular financial reviews was brought home recently, when research showed that seeking out an independent mortgage adviser and actively reviewing your mortgage will save you, on average, £962 per year on your mortgage payments!**

Financial Planning Advice - Insurance

Life insurance is traditionally regarded as a once-off investment which, once purchased, is left in a bottom drawer and forgotten. In today’s market, nothing could be farther from the truth. Industry watchdog LifeSearch revealed recently that in the last decade, the cost of term insurance has dropped by 50%. This means that good financial planning can find you a cheaper deal with a new policy, even though you are older.

If you are interested in taking a more active investment strategy and fine-tuning your savings, investments, insurances, mortgage and pension, make a financial advice enquiry or call 0800 6785929 now

*Source: investment management company BestInvest, October 2009

**Source: Association of Mortgage Intermediaries, 2009

Over three-quarters of UK workers would return to work before they had fully recovered from a serious injury or illness, due to concern for their income and the well-being of their families, according to new research published this week by personal insurances specialist Aviva. Despite this, uptake of income protection insurance is still low, with a national income protection gap estimated at £19bn.

Of those surveyed, 68% listed family finances as their major concern when on sickness leave, and 29% listed their mortgage payments as their primary issue within that. For 11% of those surveyed, a return to work before they had fully recovered would be driven by a fear of losing their job.

The survey also revealed that 79% of employees believe they could not get by on less than half their full salary, if they were forced to do so by a prolonged leave of  absence. Only 40% of companies undertake to provide half salary or higher payments to staff on long-term absence, Aviva added.

“The disturbing findings in our survey highlight just how poorly equipped to survive a period of long term absence many of us are and how this can lead us to make decisions we might live to regret,” said an Aviva spokesperson.

“The irony is that by taking out income protection – which pays a regular tax free income should you be unable to work due to illness or personal injury – families could easily be spared from may of the hardships of long term absence.”

The probability of the individual worker finding themselves incapacitated by illness or injury is relatively high, Aviva said, again highlighting the need to factor temporary loss of income into our financial planning.

In 2009, there were over 2.4m people aged 18-64 in the UK claiming incapacity benefit. Of those, over 80% were claiming for over six months, and 40% were claiming for more than 5 years.

When a business entity, whether a partnership, a self-employed sole trader or a limited company - has a key employee who falls ill or dies, life insurance cover and critical illness insurance can protect the company from loss of profits, and potentially protect the company from its creditors. Here are some examples of how insurance can be deployed as an effective ‘financial security measure’ by business owners.

Using personal insurance to protect the self-employed: When a self-employed person falls ill, they may lose their income due to their inability to work. An income protection policy can provide an ongoing ‘mini-salary’, usually equivalent to half your normal income, and paid tax-free, regardless of any other benefits you may receive. An income protection policy normally kicks in a few weeks after you give up work (you have to live on your savings during this initial  ’deferred period’) and can have an agreed term, covering you for up to two years, for example, or even running until you retire, depending on the policy you choose.

Using personal insurance for loan repayment: If a company takes out a loan, a director may be asked for a personal guarantee that the loan will be repaid. In the event of the director’s death, this could mean that the bank could call in the loan, potentially harming the business. Life insurance cover paid by the company to insure the director’s life for the amount of the loan would protect the company from this eventuality.

Using personal insurance in a partnership: In a partnership situation, it is wise for each partner to take out both a critical illness insurance policy and life insurance cover. If one partner is struck down by a heart attack or stroke and can no longer work, the critical illness payout can enable the other partners to buy him out, without delving into the partnership’s reserves. An agreement might stipulate that if the auditor’s valuation of the partner’s share exceeds the policy payout, the balance can be paid in 4 x 6-monthly instalments. If the policy proceeds exceed the value of the partner’s share, the excess is payable to the partner or his family.

If a partner dies, his life policy, written in trust and payable to the other partners, could enable the other partners to purchase his share of the business from his family, again with minimum impact on the partnership’s financials in that year.

Critical illness insurance cover is an area where understanding the terms and exclusions of the policy is essential. The importance of knowing the exclusions in all types of insurance is in the news yet again again this week, as thousands of stranded holidaymakers find their travel insurance is invalid, because the eruption of the Icelandic volcano is an ‘act of God’.

Eyjafjallajokull (the Icelandic volcano) has several important lessons for buyers of life and critical illness insurance.

First, as with personal insurance in general, critical illness insurance claims depend on understanding what is covered by the policy, and equally importantly, what your critical illness insurance cover does not include.

All critical illness insurance claims stand or fall by the level of accurate information provided in the application. If your application for critical illness insurance cover did not contain the full information requested by the insurer, your critical illness insurance claim could be reduced or rejected by the company, who might say that they would have charged you a higher premium if you had disclosed details of an item in your medical history of which they were unaware.

All critical illness insurance cover lists a range of illnesses and conditions eligible for a payout. Customers contracting an illness that is not on their policy list may not be entitled to make critical illness claims.

Critical illness insurance cover is also evolving in step with advances in modern medicine. Certain procedures are now no longer as serious as they once where, and may therefore no longer be subject to critical illness insurance claims.

The occurrence of a specific condition may in itself not fulfil the preconditions for critical illness insurance claims, if the condition occurs in a mild form. Both heart attacks and partial blindess are examples of conditions which require a certain measurable degree of severity, before a payout is possible under the terms of critical illness insurance policies. With its PruProtect critical illness insurance policies, Prudential offers reduced payouts for milder instances of certain conditions and illnesses.

Failure to disclose full details of medical history is known as non-disclosure. This can be a simple error on the applicant’s part, rather than a deliberate attempt to conceal data. Even when inadvertently done, non-disclosure is a vital mistake to avoid in purchasing both life and critical illness insurance cover.

Personal insurance, both in terms of life insurance cover and critical illness cover, are particularly important for the growing number of single income households in the UK, as revealed in a new study published today.

The number of stay-at-home-dads has increased tenfold in ten years, now standing at 600,000 compared to just 60,000 in 2000, according to new data from Aviva*, and women are increasingly taking on the earning role among the 31% of UK households that now rely on a single breadwinner.

Aviva also revealed that, in  85% of houses with children, at least one parent has significantly reduced their hours, or given up work completely, to take on parenting duties and cut down childcare costs.

Parents who make the choice to have a single income household are particularly vulnerable to loss of income through critical illness or the unexpected death of a breadwinner, Aviva says. “We’d advise anyone with dependent children to consider the importance of financial protection for their family – particularly if they are relying on one income,” said Louise Colley, head of protection marketing at Aviva.

Life insurance cover can protect your family’s standards of living should the worst happen, and an independent financial adviser can work out how much life cover is needed, not only to replace lost income, but to clear outstanding mortgage repayments and other debts as well.

However, 1 in 4 men or 1 in 5 women are likely to suffer a critical illness, which they will survive, before retirement age. The loss of income during an extended period of illness can be offset by critical illness insurance, which pays a lump sum when the holder is afflicted by one of the critical illnesses covered by the policy.

*Source: Survey of 1,084 parents for Aviva by Tickbox.net, March 2010

You can calculate how much personal insurance cover you need with our life insurance planner or critical illness planner