Long-term insurance
When you are considering taking out long-term insurance
, the intermediary should tell you his or her name, address and telephone number, the name of the insurers he or she represents, what products are being marketed, and whether he or she is independent or a representative. Ask for proof of accreditation and check that he or she has professional indemnity insurance.
Make sure that the product or transaction suits your needs and you know how the decision will affect you.
The intermediary or insurer must provide details of the premium you will be paying, the nature and extent of the benefits and how they are accumulated. Discuss the terms of the contract and the affordability of the policy. You can usually cancel a policy in writing within 30 days of receiving the summary. This also applies to any changes you may want to make. Ask the intermediary for details. But if the policy has an investment component, you will carry any investment loss.
The insurer
must send you documentation confirming policy details, including the product being purchased, the cost of the transaction (including the initial expense and commission being paid to the intermediary and, where an investment element is involved, the ongoing expense). You should also receive a summary of the contract, and the contact number and the address of the complaints and compliance officers of the insurer.
Take responsibility
* Discuss the possible impact of the proposed transaction on your finances, your other policies or your broader investment portfolio.
* Find out how flexible a proposed policy is.
* Where paper forms are required, sign them only once they have been fully completed.
* Confirm verbal information in writing.
* Contact the Financial Services Board's call centre on 0800 202 087 if you have any concerns about a product sold to you or advice you have received.
If an intermediary advises you to cancel an existing policy, ask yourself these questions:
* Is it really necessary to replace the policy?
* How does cancellation affect my benefits under the old policy?
* What additional costs are there?
Make sure the change is in your interest!
Be a good insurance client
Insurance is conducted on the principle of good faith. The client's word is accepted in the utmost good faith, because it is often not possible for the insurer to establish whether or not the client is really
telling the truth. This faith, or trust, is easily abused. You may, for example, be tempted to lie on your application form. This is dangerous as the insurer can invalidate the policy, and when you make a claim, it can refuse to pay you out. Many people are dishonest when they claim from insurance companies. They don't always tell the truth after a loss and inflate their claims. But every time a client is dishonest, the insurance company loses money. This money is eventually recovered from all the other honest policyholders in the form of increased premiums.
Lying to your insurance company (including not making a full disclosure when taking out insurance) is the same as fraud or theft.