Life Insurance Search

Yorkshire Building Society’s study into the levels of savings held by households in the UK has unearthed some worrying realities. Foremost among these is the fact that although few people have sufficient savings to cover outgoing expenses in the event of prolonged sickness, very few have decreasing term life insurance to cover this eventuality.

And with average monthly expenses of £1,445 and savings of less than £500, 36% of households would run out of money in around 11 days if illness or accident prevented them from working.

Strangely, 19% of people said they thought they would be able to survive on state benefits, despite the fact that state benefits are worth less than £75 a week, a considerable shortfall on the average weekly expense of £334.

The study shows it is unlikely that most people would be able to fall back on decreasing term life insurance policies, with only one in ten having this kind of cover.

Although nearly half of the study’s participants have life insurance cover, the fact that so few have decreasing term life insurance indicates they would struggle to meet ends meet in the event of serious or long-term sickness.

A study by the Association of British Insurers (ABI) has prompted British Insurance to urge consumers hit by the credit crunch to forsake the joy of watching the Simpsons for more serious life insurance investments such as critical illness cover, decreasing term cover and level term cover.

These statements came in the wake of an ABI study which showed that around 69% of UK adults would consider not taking out any form of life insurance protection in the future.

Nick Kirwan, the ABI’s assistant director, commented, “It is worrying that so many people are not prepared to look at taking out protection insurance, even insurance which covers redundancy given the uncertain economic outlook.

”It's clear that we need to work harder to get the message across about the peace of mind and value that having the right protection insurance gives individuals and families.”

This led a spokesperson from British Insurance to suggest that many households may need to reevaluate their economies, giving greater priority to life insurance-type investments such as decreasing term cover while giving less to luxury spends like pay-TV.

He said, “Watching the Simpsons may lift your spirits, but it will not keep a roof over your head.

”Given the current climate many will argue it's more important than ever to be able to switch off from financial pressures and enjoy watching a movie or sport.”

He went on to make comments directly related to decreasing term life insurance, saying, “This I agree with, but not at the expense of losing your home. Job loss announcements are being made daily, yet I suspect more people are happy to shell out on monthly TV subscriptions than pay a lesser amount to protect their mortgage repayments.”

The Parliamentary Ombudsman has made its long awaited report into the near collapse of life insurance company Equitable Life.

It said that the government has a responsibility to apologise to consumers for “a decade of regulatory failure” and should seek to compensate all those whose retirement savings were hit by the financial troubles of the life insurance company.

Parliamentary Ombudsman Ann Abraham identified no less than ten examples of maladministration by government departments.

She commented, “Those responsible for the prudential regulation of Equitable Life failed to do so throughout the period covered in my report.

“I have alerted Parliament to the injustice which I have found in this case resulted from serial maladministration on the part of the former Department of Trade and Industry, the Government Actuary's Department and the Financial Services Authority.”

She added that a government compensation scheme should be set up to provide compensation to all those who had lost out. “The aim of such a scheme should be to put those people who have suffered a relative loss back into the position,” she said.

Meanwhile, the chairman of the life insurance company in question welcomed the report’s findings. “From a policyholder point of view we think this is as formidable a report as the Ombudsman could possibly have produced," he said.

Adding, "We could not really have asked for more. Her reasoning and recommendations are beyond argument."

The life insurance sector is waiting expectantly to hear the results of a report into why life insurance company Equitable life nearly folded in 2000. 

Equitable Life’s crisis affected a great many life insurance policyholders, with around 1 million losing suffering loss in the value of their investment. 

The report is being overseen by parliamentary ombudsman Ann Abraham and speculations are rife that she will place much of the blame for the near-collapse at the feet of watchdog groups, the Financial Services Authority and the Government Actuary Department. 

Such a finding would be welcome news to Equitable customers, many of who are expected to try and claim compensation from the government over the roles its organisations played in affecting the life insurance giant.

A study published by Swiss Re has found that around 8 percent of UK adults do not take out decreasing term life insurance because they are sceptical about whether insurers would actually pay out on their policies.

Decreasing term life insurance is not the only form of policy consumers are sceptical about. It was also revealed that 7 percent did not take out any form of life insurance at all because of similar concerns over trust.

However, there is little way of checking whether this is actually the case, as although figures exist detailing the percentage of critical illness cover claims that are paid out, none exist detailing the number of successful claims made on decreasing term life insurance policies.

Despite this scepticism, one of the study’s authors is adamant that people have nothing to fear. He commented, "People do actually trust us. That's not as surprising as you might think - we pay out millions of pounds in claims every year and, more than that, health and protection insurance makes a real, positive, difference to people's lives."