UK Life Insurance News

Monday, October 10, 2005

 

Policyholders Could be Paying £2.2 Billion Too Much for Life Insurance

According to research by Sainsbury's Bank, almost half of life insurance policyholders have never reviewed their cover or have not done so in the last five years, missing out on reductions in premium rates.

The bank?s research found that nearly one third of policyholders ? 31 per cent ? admit to having never reviewed their life cover.

Life insurance provides financial cover should the unthinkable happen, enabling people to be secure in the knowledge that their dependents will receive a cash lump sum if they were to die. However, if all policyholders had life insurance over a 10 year term for example, they could overpay by at least £2.18 billion in premiums by failing to review their cover. If all policies were for 20 years, the total over-payment would be around £5.62 billion.

By comparing current market premiums alone the bank estimates that, on average, those with life insurance could each save up to £194 over a 10 year term and up to £501 over a 20 year term if they switched to a more competitive provider. The life insurance market has changed significantly over the last few years with new providers driving down prices and offering consumers more choice. Research commissioned by Sainsbury?s Bank last year indicated that average life insurance premiums had fallen by over 25% since 1999.

Sainsbury's Bank believes that a number of misconceptions could be behind consumer apathy towards reviewing their life insurance. David Pickett, life insurance manager, Sainsbury's Bank, commented: "Many people assume that a new policy will cost more because they?re older or their circumstances have changed, but with market premiums much lower than even five years ago, you could still switch and make a significant saving without reducing the level of cover. And as long as comparable cover with a new provider is in place before cancelling an existing contract, there is potentially a lot to gain.?

David Pickett continues: ?Life insurance can make a big difference to your family?s future and can go a long way in helping to provide peace of mind. However, you should be careful not to over pay for the cover you need. We would urge those with cover to review their policies to make sure they are paying a fair price, and for those yet to purchase life insurance to ensure, once they know what their requirements are, that they get a range of quotes before selecting a policy that is suitable for their needs."

For those who need cover, Sainsbury's Bank provides life insurance from as little as £5 a month and regularly appear in best-buy tables. Sainsbury's Bank has been named 'Most Competitive Term Assurance Provider 2005' by independent experts, Moneyfacts.

posted by UK Insurance Index  @ 10:19 AM

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