Will your Insurance Policy Pay Out.

Discussion in 'Finance, Property, Law' started by BiscuitsAB, Jan 30, 2013.

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  1. BiscuitsAB

    BiscuitsAB LE Moderator

    So you've bought life cover for the Mortgage or to protect the family. Are you sure its going to pay out?

    Across the board there are two major problems with life assurance policies and the Armed Forces.

    1. They won't pay out.

    2. They stiff you for extra premium.

    Lets break this down a bit.

    1. They won't pay out.

    A significant majority of life assurance companies will not pay out on a policy if you die on OP's. They place an Occupational restriction or exsclusion on the policy that states quite clearly that if you the policy holder die on OP's then they don't have to pay out. Now although this is stated clearly its also normally stated in very,very small print hidden away in the middle of the terms and conditions.

    Are the company/bank/mortgage adviser liable to tell you this? No. If the person you see represents one company (or group) then they legal only have to sell you the best product they have, which doesn't necessarily equate to best for you. They are also under no obligation to point it out to you. So you could end up paying £50 a month for something that may not pay you a penny.

    2.Loadings and Ratings

    A significant number of companies will provide you with cover, however they will also charge you more per month than they would if you were a civvie. This is called an occupational loading or rating. It can basically double the monthly price of you policy.

    3. Double whammy

    Yep there are companies out there who will not only charge you more for the privilege of buying cover from them, but when push comes to shove won't pay out because there's an occupational exclusion on the plan. Now that is pretty low.

    So whats the answer? Well first of all don't just assume that because the person behind the desk is selling you a contract they know what they are talking about. Secondly try and find someone to deal with who does know the market and how it affects Serving Personnel.

    And lastly if I've disturbed you enough to go grab your policy documents to check your terms and conditions drop me a pm and I'll put you in touch with one of our own on here who specialises in this field and he will be able to help you. He may even be able to save you a shed load of money each month.
  2. They are - presumably - under obligation to answer if you ask them in black and white "will it pay out if I get killed on duty"?
  3. The_Duke

    The_Duke LE Moderator

    Insurance contracts are governed by the principle of "utmost good faith". This requires each side to volunteer information which may be material to the contract. This means that you have to volunteer any information that you know that the insurer may rely on when deciding to accept the risk (or at what price) and also they should let you know all relevant facts about the policy. This is different from the policy of "good faith" which applies to something like buying a car. In this case, the parties to the contract are only obliged to answer questions honestly, but they don't have to volunteer any information unless asked.

    Insurers volunteer this information within the policy itself and something called a "Key Facts" document which covers the most important aspects of cover and exclusions which apply to the policy. If you chose not to read that document, then they have still met their obligation to provide the information. They will also be obliged to answer any questions fully, just as you should answer the questions on the proposal form fully and honestly, and volunteer any information which may be material but which is not specifically asked for on the proposal form.
  4. Well put. Although the exclusion may be part of the policy - if it is a general condition and not just one they have imposed directly on you then the only way to know for sure will be to ask. Sadly this often means speaking to an unqualified and poorly trained bank 'adviser' with no real specific or specialist knowledge of the policies they actually sell.
  5. The_Duke

    The_Duke LE Moderator

    If there is an exclusion on a policy, it will be in the documentation. You can get a copy of it before purchasing to give you time to check it through thoroughly.

    Alternatively, buy it and read all of the wording and schedule of benefits which you get sent. You can then cancel it within the cooling off period for a full refund if the policy does not meet your needs.
    • Like Like x 1
  6. BiscuitsAB

    BiscuitsAB LE Moderator

    Thanks TD, that is the absolute bang on technical answer to the situation. There is unfortunately without doubt still an element of caveat emptor when buying any policy as the person selling it may not give you the full facts, even though they are supposed to.

    For example. One case I heard about today, the Service Person who already had the policy went back into the bank and said "Does this policy cover me if I deploy" the answer from the customer services bod behind the desk "Yes. you should be fine" Should be fine is not YES its also not in writing. If you are buying a life policy or a mortgage protection policy from your bank, building society, mortgage broker, estate agent, or an advisor recommended to you by a mate, then its up to you to make sure that they know what they are talking about when it comes to arranging policies for Service Personnel.

    Spending money on a policy that might not pay our is pointless, as is paying an extra premium because of your occupation. There are companies out there who's policies are bang on for Service Personnel but they are far and few between.
  7. The_Duke

    The_Duke LE Moderator

    I can see the case for an occupation loading, even with an operational exclusion. Service life is more dangerous than many other types of employment, even if the "exposure" stops on touching down at Bastion.

    How many people die or are seriously injured each year on exercise, playing sports on camp or driving home knackered after an exercise?
  8. True but the point being there are insurers who will not load but they dont have the distribution channels of the banks.
  9. Being the clever girl I am, and now living on the breadline with my pension and NOT CLAIMING BENEFITS (yeah, I know I'll get told off for that), I got a print out of my Direct Debits today.

    Now, I don't mind paying for the mortgage, water, gas, leccy, telly licence, phones and internet access. What I do I get fecked off with is paying twice for home insurance. Direct Line (car insured by them) and HSBC (needed to have the home and life insurance for the mortgage and apparently includes car insurance).

    The car refused to soldier the other week. Both companies****ed me off. I had to get the bloke from SG Petch to come and charge it (it was naughty). I nearly saw my arrse when I saw I was still getting charged for Pet Insurance, until I noticed the date on it.

    I'm not happy with the Direct Line Home thing though. They did a shit job when the pipe in the kitchen broke.

    I may have to make some phone calls.

    BAB, you've got me on that FB thing. Ping me.
  10. A guy came round from SLI ( www.servicelifeinsurance.co.uk/ ) for our MST lecture package, it seems a good deal to, the payment is coming straight from pay slip also.
  11. As a policy its fine but rates are quite high and the majority of people will be able to get equivalent cover cheaper.

    It is however the dogs for SF, EOD, Divers and those within 6 months of deployment. That however is only around 10k people. The other 70/80/90k can and should do better.
  12. Back at you BAB, I'm on the phone now.
  13. Sluggy, write to them and ask the to confirm, in writing, that you HAD to take out the insurance with them.

    This does sound unusual. Naturally they'd LIKE you to take all the stuff out with them...
  14. And its been YEARS since mortgage companies have insisted on having a life policy assigned to them - early 90's perhaps.

    Most will carefully word it to make you THINK you must have it when they are technically suggesting it only

    Edit to add : The HSBC Life/Critical Illness policy is by comparison to most others poor in terms of value and features.
  15. HSBC are getting back to me. I've never really had many problems with them. Direct Line have been ******* to me though.

    Oh, and stop being a mong and boxing out of your range. There's a good lad. I can only look after you so much.
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