Protection
Insurance can be divided into two areas - general and life insurance.
General insurance and life insurance
General insurance covers your house, car, travel, mortgage payments, private medical treatment - in fact any short-term policy that pays out when things go wrong. Life insurance (which also includes pensions) covers policies that are of a long-term nature or pay out at the end of a term.
Most insurance policies fall under one of these two categories, although some types of insurance, such as income protection insurance and long-term care policies, count as life insurance if they have an investment element and general insurance if they don't. All companies which provide insurance must be authorised by the Financial Services Authority (FSA). At Financially Sound we deal specifically with Home and Life Insurance.
The FSA has the duty to ensure that insurance companies are solvent and operate in a prudent manner. It also regulates how those policies are marketed and sold.
Before you buy
Before you take out insurance, ensure you know the answers to the following questions:
- If I make a claim, will I have to bear any amount of the cost myself?
- Are there exclusions or restrictions in this policy which may apply particularly to me or my family?
- Who do I complain to if there's a problem with this insurance?
Understand the jargon
Understanding some of the main terms will help you to clarify the type of policy you have and assist when you need to make a claim:
Excess
An amount of money which the policyholder has to pay towards the cost of a claim, for example, the first £100.
Index-linked
Insurance where the amount of cover and premiums change automatically in line with inflation.
Loss adjuster
An independent person paid for by the insurance company to assess the amount payable for a claim.
Loss assessor
You can employ a loss assessor to act on your behalf, particularly helpful if you have a complicated or large claim. For a fee - usually a set percentage of your eventual pay-out - they will negotiate to ensure that compensation from the insurance company is maximised. The Institute of Public Loss Assessors can put you in touch with one of its members in your area.
New-for-old
Cover for property with no deduction for wear and tear. The item lost or destroyed would be replaced with a new one.
Third party
Someone involved in a claim who is neither the policyholder nor the insurer.
Under insurance
When the sum insured isn't enough to cover the maximum possible loss or damage.
Underwriter
The person who decides whether to accept a risk and calculates the premium to be charged.
Write-off
A damaged vehicle which isn't repairable or one which would cost more to repair than the car was worth before the damage occurred.
Financially Sound Limited is an appointed representative of Personal Touch Financial Services Limited which is authorised and regulated by the Financial Services Authority.
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