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MSE News: Insurers failing to give clear information on payment options

edited 30 November -1 at 12:00AM in Insurance & Life Assurance
14 replies 1.7K views


  • rs65rs65 Forumite
    5.7K posts
    Ninth Anniversary 1,000 Posts Name Dropper Combo Breaker
    gadgetmind wrote: »
    I've run the sums for every insurance renewal (and TV license BTW) and have always decided to make a one off payment.

    Same here - unless its interest free. I suspect the majority pay monthly but I've never seen stats on this.
  • gadgetmindgadgetmind Forumite
    11.1K posts
    Tenth Anniversary 10,000 Posts Combo Breaker
    Interest free aka "you're paying interest but we're hiding it".

    Insurance margins are wafer thin so most of their profit comes from getting up front payments but on any claims being further down the line.
    I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.

    Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.
  • ConsumeristConsumerist Forumite
    5.5K posts
    Part of the Furniture 1,000 Posts Name Dropper
    gadgetmind wrote: »
    Interest free aka "you're paying interest but we're hiding it". . .
    Agreed. See also "0% finance". :(
    >:)Warning: In the kingdom of the blind, the one-eyed man is king.
  • PincherPincher
    6.6K posts
    The important part is that you cannot cancel the policy part way and get a refund.

    If you pay in one lump sum in the beginning, no credit agreement has been drawn up, and the insurer can give you a pro rata refund, less some admin fee.

    Idiots want the monthly option, thinking that they can sell the car in say month 9, then cancel the direct debit, and walk away from paying any more.

    What happens is the premium was £500, but a middleman signs a loan agreement for £600 with the policy holder. The insurer gets £500, just like a single lump sum premium. You have an obligation to pay £50 a month for 12 months to a loan company, and the loan agreement has nothing to do with your insurance. The insurance company may be willing to give you a partial refund on the £500, but you have to complete the 12 payments any way.

    If you want to spread the payment, you can get a 0% purchase credit card, pay the £500 premium, then pay off the balance over whatever the credit card deal is.
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