Archive for May, 2008

What can you do with £46.67 a week? This, it seems, is what the average family has left over after paying all the normal household bills. And there are probably not many people who would welcome the prospect of using any of this small margin of income on yet more insurance. For very many people, however, a reasonably small investment in the purchase of unemployment insurance could still be money very well spent.

According to analysis that appeared in the daily Telegraph newspaper, after it has paid food and utility bills, taxes and the mortgage, the average family has only £2,427 a year left over to spend on other “essentials” such as clothes, household repairs, telephone calls, medicine, holidays, eating out, alcohol, credit card repayments and child care. That is to say, just £46.67 to stretch a very long way!

It is not surprising, therefore, that many people would also think twice about spending any more of this tiny, precious reserve on such a thing as additional insurance.

Yet the alternative is probably more horrifying. The forces that push up the cost of living are the same forces that are putting many companies – especially small businesses – under similar pressure. When the companies fold, then of course the jobs they offered go with them. Job security has become little more than a dim recollection and when redundancy hits the breadwinner of a family already hard pressed to meet the monthly bills, the consequences can be catastrophic.

Although unemployment insurance will certainly add to your items of monthly expenditure, it will add only a very few pounds. Although unemployment insurance is also most usually bundled with accident and sickness insurance, it is possible to reduce the cost of premiums quite significantly by only purchasing the element that covers involuntary redundancy.

Simon Burgess, who is the managing director of British Insurance, one of the specialist independent providers of such standalone unemployment insurance, comments: “unemployment insurance can be such a cheap form of cover that the premiums make hardly a dent on the list of monthly expenditure – yet the benefits, in the event of redundancy, can prove their weight in gold”.

How do you get into debt? Fairly clearly, it is being unable to pay your bills when they fall due. The inability to pay can arise from a number of reasons, of course, but one of the main ones is because of an interruption in the income which you had been expecting to receive as normal. One of the most frequent interruptions comes from the need to take unpaid time from work because of an accident or ill-health. It is then that accident sickness insurance proves its value as an indispensable safety net.

In return for a fairly modest premium each month, accident sickness insurance provides a replacement income – and is therefore frequently described as an income payment protection insurance – with which you can continue to pay the bills as they fall due, before your return to work and normal income resumes.

Without such insurance, of course, the debts can too easily spiral out of control. In the current economic climate, this is proving to be the painful experience of a lot of people. And no longer just the stereotypical debt-problem groups of people who have traditionally found it difficult to make ends meet – those on benefits and living in social housing for example. Recent reports from major debt advice agencies – represented by the national forum on debt advice, Transact – have shown that even relatively wealthy middle-class families are now being forced to seek help with their debts.

Community Money Advice, for example, a charitable organisation that offers drop-in advice in centres throughout the country, reported an 85% increase during the course of last year in the number of people seeking help, many of them in normally well-paid jobs.

Echoing these trends, Simon Burgess, the managing director of a company specialising in accident sickness insurance, British Insurance, says: “debt profiles are certainly changing and concern about protecting the continuity and stability of a monthly income seem to be reflected across all social groups. A sudden loss of income – whichever income group you happen to belong – can be difficult to manage. Many more people are beginning to recognise the extraordinary value of accident sickness insurance”.

Loan protection could help you in the current economic climate, which seems to be turning ever more hostile. The government’s own recent figures show that the average family is being battered on every front:

• Increases in food and fuel bills have raised the expenditure needed by an average household an additional £1,300 a year – the fastest rate of growth in such prices for 17 years;

• The total number of people unemployed and the total claiming unemployment benefits are both rising faster than at any time in the past two years;

• Individual bankruptcy applications rose by 12% during the first quarter of 2008, compared with the final quarter of 2007, while company bankruptcies also increased by 3% over the same period;

• Repossession applications by mortgage lenders have risen by 16% over the last year, which has seen the biggest increase since the early 1990s.

All in all, it is a time when most people could do with all the financial protection they can get. Loan protection, however, should perhaps come in for a word of special mention.

As personal finances come under greater and greater fire, there is less and less slack to cover the all too frequent mishaps in life – like accidents and illness, not to mention an unexpected notice of redundancy from work. With household budgets stretched to the limit, the loss of income makes it well-nigh impossible to find the necessary loan repayments each month. Without them, the future holds a tarnished credit record at best; a county court judgment or even bankruptcy at worst.

And that is why loan protection has become such an indispensable safety net. Even if you lose income whilst incapacitated from working because of an accident or illness, or if you have become involuntarily unemployed, loan protection insurance will ensure that the repayments continue to be paid.

Experts in the provision of standalone loan protection insurance are British Insurance. Their managing director, Simon Burgess, says: “Loan protection has become an essential part of most people’s armoury as they buckle down to face whatever the current hostile economic climate may have to bring”.

There is a very good reason for these three to be packaged together into one convenient and extremely useful insurance package. Insurance against each of these risks covers some of the most common reasons for people getting into financial difficulties and falling into problems with debt. Accident sickness redundancy insurance helps to keep debt problems at bay.

In the past year, the credit crunch has really begun to bite, forcing up prices to such an extent that the “typical” family – with two children a £150,000 mortgage and a car – is now having to pay £24,665 a year, or a massive £474 each week, on the household bills, utilities and fuel. With outgoings on anything like that scale, it is easy to see that a loss of income, however temporary, can severely disrupt even the most carefully planned family budget. When working days are lost through accident or sickness, or if sudden redundancy looms, it is no wonder that more and more people turn to debt advice.

If any one of these setbacks should happen to you, therefore, one of the first things to ask yourself is whether you have any accident sickness redundancy insurance cover. If you do, there is usually a qualifying period of between 30 and 60 days (depending on the particular product) during which you have to have been off work in order to make a valid claim on the insurance. After the qualifying period, some policies will then backdate the payable benefits to the first day you were unable to work; others may treat the qualifying period as a form of excess on the policy and you will not receive any benefit for this period. The benefits – effectively a type of replacement income – will then be paid each month until you are fit enough to return to work, or in the case of redundancy, until you have found a new job. The maximum number of months for which these benefits will be paid is generally 12, although more costly accident sickness redundancy insurance can be bought which extends the maximum cover to 24 months.

A company providing accident sickness redundancy insurance with a qualifying period of just 30 days, followed by backdated benefits, and cover that extends for a full 12 months, is British Insurance – they could prove a good starting point for your search.

What does it take to be faced with the threat of your home being repossessed? Probably rather less than you think. An unexpected bout of illness, an accident perhaps, or even enforced unemployment could all put you out of work at least temporarily and leave you without the means to keep up your mortgage repayments. Armed with the protection of accident sickness unemployment insurance, however, you have at least a fighting chance of keeping repossession at bay.

If a loss of income leaves you unable to cover the cost of your mortgage and you default on the repayments, the mortgage lender can claim repossession of your home. Such a claim is then followed by a court order, which allows the lender to apply for a warrant for repossession. The majority of such orders, however, do not actually result in repossession because the lender and borrower are able to come to a mutually workable solution. Any such arrangement in itself, however, is not only worrying and time consuming, but also likely to leave you financially worse off in the long term and probably result in an adverse credit report that makes borrowing in the future considerably more difficult.

Figures recently released by the government’s Ministry of Justice reveal that 38,688 repossession claims were made by mortgage lenders during the first quarter of 2008. This represents an increase of 7% over the previous quarter and a rise of 16% in the past year – the steepest rise since 1991. The spectre of repossession, therefore, is no empty scare-mongering.

Simon Burgess, a specialist in accident sickness unemployment insurance and the managing director of leading independent providers, British Insurance, says: “at a time when almost every last penny of a family’s budget is already accounted for, a sudden loss of earnings through accident, sickness or unemployment can be such a blow that in no time at all, a homeowner can be brought to the brink of repossession. Anyone who has so far failed to put the appropriate cover into place is running a huge risk and is inevitably vulnerable to their personal finances – including their home – going horribly wrong”.

Premiums for loan protection insurance might seem like yet another unwelcome addition to the almost endless list of monthly bills, but skimping on them could leave you a hostage to fortune’s future. Loan protection insurance offers a way of ensuring that present difficulties do not come back to haunt you in the future.

The relatively modest premiums you pay for loan protection insurance ensure that repayments on a loan continue to be made even though you may be losing pay from work as the result of taking time off to recover from an accident or sickness or have been made involuntarily unemployed. Maintaining the payments, of course, is essential if you are to avoid damaging your credit rating or heading into a spiral of debt that could lead to county court judgments against you or even bankruptcy. The future would be bleak indeed if you were unable to obtain credit or obtain it only on thoroughly disadvantageous terms.

In the words of a leading specialist in loan protection insurance, Simon Burgess, of independent providers, British Insurance: “loan protection is about taking care of your future – a future which is free of a damaged credit reference file and free of creditors forever snapping at your heels. If you are off work through an accident or sickness or temporarily unemployed, the last thing you’ll want to worry about is whether the loan repayments have been made on time”.

Although some highly competitive rates for standalone loan protection insurance are available from independent providers such as British Insurance, remember when shopping around for the best deal that such insurance is likely to come far more expensive when bought from a high street lender at the moment you are actually taking out a loan.

What you are most likely to need as protection in the event of redundancy is a replacement income to ensure that you can continue to pay all your regular bills until you find another job. Just how much replacement income you will need during this period of course depends on your personal circumstances and the size of your monthly outgoings. And this is where redundancy protection can help.

Redundancy protection or unemployment protection insurance can provide you the replacement income you choose – typically, up to a maximum 50% of your normal monthly earnings or £1,000, whichever is the least. In this way, you can insure the income of your choice and pay the appropriate premium, which is generally calculated on the basis of each £100 of monthly income covered.

If you are especially fortunate and find another job almost immediately, then some redundancy protection policies will not pay out, since there is usually a qualifying period, or number of days during which you must be unemployed before the benefits become payable. With some policies, this qualifying period is treated more or less as an “excess” loss, which you would need to cover yourself; with other policies, however, once the qualifying period has been passed, the benefits are backdated and become payable from day one of your period of redundancy.

The latter case, in which benefits are backdated to day one of your loss are clearly the mark of a rather better quality insurance. Indeed, this is one of the benefits of going to an independent insurance provider like British Insurance, where you will be covered from day one. As the company’s managing director, Simon Burgess, says: “Redundancy protection is all about providing the policy holder with a replacement income that is sufficient to cover the regular domestic outgoings while he or she is looking for another job”.

With the jobless total rising with each successive month of 2008, and with growing numbers of individuals and companies either declaring bankruptcy or having their creditors petitioning for their bankruptcy, it is little wonder that so many people are asking themselves how to cover redundancy. The prospect of unexpected, involuntary unemployment seems all too real.

What is more, it is not necessary to look very far to see why this should be such a real concern to the average family. A recent analysis by the daily Telegraph newspaper suggest that the average household’s costs – which include food, utilities, insurances – for a family with two children, a £150,000 mortgage and a car come to a massive £24,665 a year, or £474 a week. This frightening total is the result of recent major increases in consumers’ bills for gas and electricity, petrol and food, says the newspaper.

With the average family’s monthly expenditure running at this sort of rate, therefore, many people are quite rightly worried about how on earth they would pay all those bills if the major breadwinner were suddenly to be made redundant.

The answer, of course, lies in adequate unemployment protection insurance, which can be bought for just a few pounds each month and which guarantees a regular, monthly replacement income for up to 12 months or until alternative employment can be found. This does not make the prospect of redundancy any less alarming, but it certainly makes the financial burden during the interim considerably easier to bear.

To learn more details about how you can cover redundancy, consider contacting one of the independent insurance providers, like British Insurance, who are specialists in this field.

Many people buy life insurance or critical illness insurance for the peace of mind it gives them that their dependents will be financially cared for in the event of their death or the diagnosis of a critical illness. It is perhaps surprising, therefore, that fewer people seem to seek the same peace of mind from the risk of an almost equally devastating event such as redundancy. Redundancy insurance, however, can buy you just the same reassurance that you and your family are financially protected.

It’s the uncertainty that can give us sleepless nights. And there is surely a good deal of uncertainty around these days. The so-called credit crunch has put not just individuals, but companies too, under a great deal of financial pressure. It is the sort of pressure that drives previously solid companies to the wall – and with them the jobs they offered. The number of companies facing winding-up petitions from their creditors has been rising throughout the opening months of 2008 – according to the government’s own Ministry of Justice figures. Experts are predicting that these figures will rise still further as the year progresses. And as companies are wound-up, of course, then more and more employees are made compulsorily redundant.

As the managing director of one of the leading providers of redundancy insurance, Simon Burgess of British Insurance puts it: “whether it actually happens to an individual or not, the fear and anxiety about redundancy is inevitably more widespread than before. For anyone losing sleep for worry about the future of their own job, I’d have no hesitation in recommending them to buy a simple, low-cost redundancy insurance policy straight away”.

Alarming figures released by the Office of National Statistics reveal that the average household is now paying approximately £1,300 a year because of increases in food and fuel bills. These reflect prices that have climbed at a rate faster than at any time in the past 17 years. As family budgets are squeezed more and more tightly, it becomes more important than ever that serious thought is given to loan insurance.

As incomes are squeezed more tightly by the rising cost of expenditure, so not only is the capacity for saving starved, but so is the prospect of any slack at all in the domestic budget. Nevertheless, the majority of families continue to stagger by – until, that is, an unexpected setback strikes, such as the incapacity to work because of an accident, or sickness, or maybe even a sudden redundancy notice.

When these events occur, the absence of any significant savings or slack in the normal household budget means that it is extremely difficult to continue to pay the bills, including the repayments on any loans that might have been taken out. Since defaulting on those loan repayments is almost certainly going to result in an adverse credit report at best and severe debt management problems at worst, it has become more important than ever to have the protection of loan insurance.

In return for the fairly modest outlay of a loan insurance premium, you can be assured that loan repayments will continue to be made in the event of your being off work through accident sickness or involuntary unemployment.

Specialists in the field of standalone loan insurance – invariably a better and more affordable option than a lender’s in-house brand – are independent providers, British Insurance.