Insurance: Are You Paying for the Same Thing Twice?

Have you ever thought about how much insurance you pay each year? You will be amazed at the amount you pay for different types of insurance if you do the sum. In all likelihood, you will also find that you pay more for certain types of coverage than you actually need.

Theft, death, income loss, legal expenses, and death are all common areas that can be duplicated. This is often due to people not understanding their coverage, particularly if they have been arranged through an adviser or broker.

Recent results of a survey by the Financial Services Authority (FSA), showed that car insurance premiums often include add-ons such as legal expense and breakdown recovery. People often add payment protection to their permanent medical insurance policies, which can lead to them taking out additional coverage for loans, mortgages, and other expenses, but not realizing that they already have it all. These people don’t have to make payment protection provisions. It’s a waste of time.

The Financial Ombudsman added the following to this issue: “People… often don’t realize until they file a claim that they have been paying a policy that provides very few, if any, benefits.”

Many people don’t even know what their coverage actually covers. Amanda Lariviere, West Yorkshire, is a perfect example. Amanda was diagnosed as having ovarian cancer. Her reaction to chemotherapy made it impossible for her to return to work. At the end of the year she received a tax bill. To raise the funds to pay it, she went to her mortgage provider to arrange a refinance to clear the cash. The financial advisor at her building society asked Amanda to bring along her details of life insurance. She discovered that these policies did not cover life but critical illness. Amanda was paying PS80 per month for these critical illness policies from Scottish Provident and Norwich Union, but she didn’t really understand what they were.

Amanda, a survivor from a critical illness, was able claim on both policies. She also received a PS100,000. This covered her tax bill, most of her mortgage, and a lot more!

It’s worth checking the coverage of any of these policies to make sure there is no duplication.

You can either purchase critical illness insurance on its own, or as an addition to your life insurance. You may be already covered by your employer so make sure to ask before you buy this type of coverage.

Many companies include life insurance in their pension plans. It is often called a death-in-service benefit. If you die while employed, the company will pay a lump sum that is exempt from tax. This usually amounts to three to four times your last annual salary. This could mean that you won’t have to buy an additional policy.

Permanent Medical Insurance (PMI), and Payment Protection Insurance, (PPI), are very similar in that they provide a monthly income to you if you become disabled or incapacitated from work due to illness or injury. You don’t have to add PPI to your car insurance, loan, or credit card if you have PMI. PPI policies are only good for one year. PMI will not continue to pay until the policy ends. PPI is often attached to the financial product you’re purchasing, so you don’t notice it. This article explains that PPI adds up. If you have PMI, try to avoid extra charges for these PPI policies.

Mobile phone insurance is not worth the paper it is written on. An excess of PS50 will be required for any claim. It’s better to switch to pay-as you-go instead.

Legal expense insurance is available for both car and home insurance policies. This means that all court costs are covered if there is a dispute over liability. You don’t have to get it. It may be an option in your policy. You may be already covered by services offered by trade unions or professional associations if you’re a member. Make sure you find out before adding legal coverage.

You may not think of ID theft insurance. It does exist, and it can be a stressful and frustrating experience for victims. According to “Which?”, victims will only be responsible for the first stolen PS50. According to ‘Which?’ magazine, it is not worth insuring. You may not be expected to pay the first PS50 by your bank.

Credit card purchases are protected for a set period of time. This can often be up to 60 days. New purchases are also covered. For the next 60 days, theft and accidental damage will be covered by Barclaycard purchases between PS50-PS2,000.