Clueless

Bogbean

Hi, I must apologise for the long post but my Husband and I have just moved house (we also have a small rental of no current value!) and are bamboozled by our FA's suggestions of what we "need" in terms of insurance/assurance. I have posted his info below and would be soooo grateful for any advice - even it's just telling me I'm daft! I accept that the answer may be that if we can afford it just do it but, as my instinct is to trust people - even if they have a financial incentive - I think this skews my judgement. For info I have 26 yrs NHS service as a nurse and sick policy of 6mth full pay then 6m half pay. Anyway, info below - thanks in anticipation - Helen.

I have some figures to give you the heads up and if you have time you can let me know your thoughts and I can make sure
I have brought the relevant paper work.

You have several options ranging from;-

Do nothing at all .... all the way up to full Rolls Royce protection, you must let me know where you wish to pitch yourselves.

Option 1 Life Cover only option £305,000 to clear the Cottage mortgage around £65 per month as one single policy.

Option 2 Life Cover only to clear rental property £25 per month as one single policy.

Option 3 Life Cover or Critical illness (whichever is first) to clear Cottage You £110 Hub £125. You will need one each of these as if it were a joint policy as soon as one of you claims on the CIC the other loses their cover.

Option 4 If we are going to cover your income against long term illness then we can have a benefit of around £1,450 per month until age 60 @ around £50 per month or a lower start option of £24 per month.

Option 5 The same polciy for Hub would be £1,750 per month with a premium of £75 per month or a lower start one of £42.

Option 6 This is the serious illness cover that will pay out "All or Something" as opposed to "All or Nothing" as options 3 & 4 above. For you it would be £102 per month and provide £100,000 of life cover (not enough to clear the mortgage) or £100,000 of CIC. The really clever part is the day after a CIC claim the £100,000 account is topped back up and is there again for you to use, this can be done 3 times so effectively wil provide £300,000 CIC.

Option 7 For Hub would be £125 per month for the same benefits.

I think we would need to do a bit of mix and match, the figures for Options 3 & 4 or maximum figures, you do not have to
take the maximum amounts.

Options 6 & 7 are an example of £100,000 cover, this could be reduced to a more affordable level, you just need to
be aware that the lower amount wouldn't clear the mortgage if that was what you were going to use it for.

dunstonh

are bamboozled by our FA's suggestions of what we "need" in terms of insurance/assurance.

You shouldnt use an FA. You should use an IFA. Its cheaper and IFAs tend to be more experienced and knowledgeable.

An adviser has a requirement to tell you what you actually need. Whether you want all of that is a different matter. Indeed, for most people, you cannot afford to cover yourself for every financial need. So, you usually have to compromise somewhere. Where you compromise is very much a personal thing (often based on life experience and current financial position).

So, in that respect, I am not going to tell you what you should compromise on as what I may not have may be considered important to you (or vice versa).

Bogbean

Hi and thank you. I think he is an IFA in that he isn't attached to our bank or anything - we sought him out to facilitate a house purchase after a recommendation from a colleague.

I am no expert though so apols if have got them mixed up!

I used the link to Cavendish on this site and got joint life assurance for about £40 less/mth so was concerned at committing to his products in case we were paying over the odds and should source it independently. Obviously we appreciate that he has to make a living but we are keen to still make good decisions based on info from several sources whereas I often can be overwhelmed with the unfamiliar territory.

Thanks again.

Annisele

You could always ask the IFA "I found a link to such-and-such a policy online, and it is £40 pm cheaper - can you explain the differences between the policies". If he can't give you a satisfactory explanation - or if you don't trust the one he gives you - walk away.

dunstonh

I think he is an IFA in that he isn't attached to our bank or anything - we sought him out to facilitate a house purchase after a recommendation from a colleague.

IFAs are normally obvious as their title will be independent financial adviser or their business card, headed paper etc will make it clear. Clients of IFAs would rarely not know they are an IFA. Whereas clients of FAs often think theirs is an IFA (research has found around half of customers of tied agents think their adviser is an IFA). I mention it again because of the £40 premium difference mentioned below.

I used the link to Cavendish on this site and got joint life assurance for about £40 less/mth so was concerned at committing to his products in case we were paying over the odds and should source it independently.

Thats a big difference. Cavendish are IFAs but put the policy through on nil commission basis instead of commission basis. The difference between the two is not normally that much different. The big differences usually come from tied agents (who are more expensive even when using brand named insurers) or when you are not comparing like for like (such as comparing yearly renewable term assurance against guarnateed premiums or mixing up CI cover with TI).

Bogbean

Thanks to both of you - I will go and check his business card and also ask more questions.

Bogbean

This is his title and qualifications - I'm not knocking him by the way, just trying not to be blindly trusting which is my tendency!

CeMAP CeRCC AdvCeMAP CeRER
Independent Financial Planning Specialist

dunstonh

Thats fine, he is an IFA. So, a £40pm difference suggests either a very large monthly payment or not like-for like on coverage. So, next thing is to compare the policies to see what the difference is. BTW, how much is the premium as it would indicate to us which is the most likely difference.

Bogbean

Thanks, we are seeing him tomorrow and I'll post the outcome, if only because it may help someone else.
Helen

stephenni1971

I think the issue is this....

As an IFA my job is to distill complex information into something that can ben communicated and understood to my client.

You have been presented with 7 options for cover which vary wildly in terms of what they will provide ( the serious illness cover for example goes a lot deeper than he describes )

In effect he is not really giving you advice but rather presenting you with a lot of choices and asking you to make one. IF you were having a somple comparison between two levels of life cover, or two terms, I would have no hesitation in forwarding them through to client in advance of meeting for them to look through, but you have been quoted Life cover, Life & CIC cover, Income Protection ( PHI ) and Serious Illness Cover!

Some are priced jointly, some for single cover, he also suggests different deferral periods on the PHI cover.

In essence he is giving you far far too much detail that you could never be expected to understand.

Bogbean

Hi and thank you.

Yes I must say that we really don't know what to think or where to start. We don't have enough spare to pay for everything and are finding it difficult to know how to prioritise. I try to strike a balance between planning for a future which never comes (seen too many young deaths as a nurse) and being sensible in case I make old bones but am not sure here whether serious illness is better than critical etc. I am aware that many people turn out not to be covered by their policies but I don't know if that's because they have gone for cheapest options or whether these policies rarely pay out.

It fries my brain to be honest as just not an area I know about although I do of course have the nouse to check the facts and not sign up blindly. It's just hard to decide on these things.

I'm very very grateful for advice from you all. Thanks, happy for more if you have it too!