Insurers may have to insure you, even if you’re uninsurable.

Price Comparison websites have received a fair bit of bad press over the years, and they’re a good starting point for getting some initial ideas on pricing and types of insurance.

Car insurance is more straightforward and websites like GoCompare are pretty good for comparing common features and benefits.

What Price Comparison Websites don’t do as well is compare the different benefits provided by different insurers and their contracts for life and critical illness insurance policies.

Here’s a ‘for instance’: Guaranteed Insurability (GI)

Some contracts include GI, but many don’t. GI means that, in certain circumstances, the insurer must offer you insurance at your own rates, even if you’ve become uninsurable due to ill health.

You can imagine the situation where someone moves home, only to find that due to their ill health they are declined further insurance by their insurer and cannot protect their family against the increased mortgage balance. Whereas, if the policy had GI written in to it, the insurer would have little choice in the matter.

GI has of course certain limitations, but can often be included in your plan from the outset at little or no extra cost.

Not all providers include GI, so speak to your adviser to find out more about Guaranteed Insurability and make sure your life or critical illness insurance has some.

Aviva Annuity Advert – did you see it?

I noticed an interesting advert in the Daily Mail this week, by Aviva selling their lifetime annuity (see below).

Aviva are one of many lifetime annuity providers, and sometimes provide some pretty competitive rates.

Now, if lifetime annuities were the only type of annuity, then I would tend to agree that you only get one chance, because that’s how a lifetime annuity works:

You send part or all of your pension fund to a provider like Aviva and in return they provide you with an income designed to last for your lifetime. They are often selected by people who do not want to revisit things at a later date – think of it as ‘fire and forget’.

For those who don’t want to make an irrevocable choice, a temporary annuity might be worth considering.

In the case of a temporary (also known as a term annuity), your annuity lasts for a specified term, for example, 6 years. At the end of that term, you get to make another choice.

Of course there are risks with both lifetime and term annuities which you should discuss with your adviser, and annuities are not the only way of taking an income from your pension fund.

However, my main point is that if you take the Aviva advert at face value, you might think that there is only once choice of annuity, when both you and I now know, there is more than one choice.

Annuity Planner from the Pensions Advisory Service

The Pensions Advisory Service (TPAS) has provided an excellent Annuity Planner. If nothing else, it gives you an idea about many of the options which are available to you. Remember though, it’s not a calculator nor does it provide any form of advice for you.

Click on the this link to access the Annuity Planner.

NEST 8 Golden Rules for Autoenrolment

One of the key aspects of an employer’s pension scheme for autoenrolment is ensuring that you communicate effectively with your workforce.

The National Employment Savings Trust (NEST) has revealed their 8 Golden Rules:

1. Keep it real: Use examples people can relate to and avoid abstract concepts.

2. Rights not responsibility: Tell people what they’re entitled to not what they should be doing.

3. Out with the old: Make pensions relevant to their lives now and don’t focus on the details of retirement.

4. One for all: Make it clear automatic enrolment is happening to most workers, not just them.

5. Tell it like it is: Present the facts and avoid ‘spin’- people want to make up their own minds.

6. Give people control (even if they don’t use it): Tell people about their choices and not that everything’s done for them.

7. Take people as you find them: Give people access to information that matches their knowledge and interest.

8. Be constructive: Tell people about solutions, not problems or scare-stories.

Our opinion is that there’s no better time to start simplifying the pensions regime than right now. However, the 8 rules seem to be more about marketing and less about actually sorting out pensions legislation, of which the Pensions Act 2008 simply added to.

Simplification was previously attempted in 2006 – there were even exams for advisers on ‘pension simplification’ an terms such as ‘tax free cash’ were changed to become ‘pension commencement lump sum’ even though you didn’t have to ‘commence your pension’ to take the it.

Here’s the link to their research it you’re that interested. NEST cost £120million to set up, so hopefully you’ll think there is value to money in this research.

Please note that the earnings trigger for autoenrolment is now £8,105.

Autoenrolment Seminar

Brian was an invited speaker to a seminar on autoenrolment for local businesses today, hosted by White Horse employment, also based in Trowbridge.

Autoenrolment (AE) into employer’s workplace pension schemes starts its roll out in a matter of months. Adding a whole new level of regulations to pensions, virtually every employer will be effected. The process starts with larger organisations so HR departments and finance departments will need to work closely together to ensure their organisation isn’t penalised by the Pensions Regulator.

Sharing the platform with Phil McCabe (employment solicitor at Sylvester Mackett), Brian shared details of some of the challenges ahead for business owners and managers, and some of the less know facts about autoenrolment.

Feedback from 100% of the 48 participating firms who completed our feedback form was rated good – excellent.

EU Gender Directive – women’s life insurance costs to increase

Do you recall something in the back of your mind about the new EU Gender Directive?

This is where the EU has decided that insurers who charge different prices to females than to males, and vice versa, are discriminating against females………….or males.

Ladies live longer than men, apparently. Thus, actuaries used to give ladies better pricing on their life insurance, as well as car insurance, but not on annuities (because they’ll live longer of course!).

What does this mean for you?

If you are a lady then, from 21st December 2012, the cost of buying new life insurance will increase, possibly by around 15% according to HM Treasury (December 2011). 

In real money, this means that if you were paying £50 per month on a 20 year level term plan, it may go up to £57.50 per month. Over the 20 year term, you’ll pay £1,800 more.

It may also effect those of you ladies who have reviewable premiums and you may find that your premiums increase by more than you thought they would.

So, does this mean that the cost of men’s life insurance is going to reduce then? Unlikely, simply because ladies cannot be priced below men’s prices, doesn’t mean that men should be priced less than they are already.