# I think life assurance companies play on your fears. Do you really need it?



## Elphaba (3 Feb 2007)

I think life assurance companies play on your fears. Do you really need it?

If you are both healthy, you would be better off if you just saved the money or bought some dividends in some loaded institution i.e. a bank. 

Dont go to a broker, cause they'll probably get a nice fat commission out of the money you pay over the years. I'm self employed and healthy and happy, had life assurance for a while, cancelled it, foolish to think I'd get something back,
I didn't, instead putting more money into pension and also saving a few bob to enjoy, NOW. Remember there is such a thing as being over insured.

You probably already have a mortgage protection policy.....


----------



## harvey (4 Feb 2007)

*Re: Advice on "Combined Insurance Company"?*



Elphaba said:


> Dont go to a broker, cause they'll probably get a nice fat commission out of the money you pay over the years. I'm self employed and healthy and happy, had life assurance for a while, cancelled it, foolish to think I'd get something back,
> I didn't, instead putting more money into pension and also saving a few bob
> to enjoy, NOW. Remember there is such a thing as being over insured.
> You probably already have a mortgage protection policy.....


 

And which company did you take out your pension or mortgage protection policy with ?


----------



## Elphaba (5 Feb 2007)

*Re: Advice on "Combined Insurance Company"?*

Pension, BOI life, medium risk but is performing well. Also evergreen fund.
Mtge protection policy with Eagle Star, but need to review that one. 
I think with extra life insurance unless you can really afford it, you're better off investing your money into something tangible.


----------



## harvey (6 Feb 2007)

*Re: Advice on "Combined Insurance Company"?*



Elphaba said:


> Pension, BOI life, .


 
BOI life received commission too.


----------



## ClubMan (6 Feb 2007)

Elphaba said:


> or bought some dividends in some loaded institution i.e. a bank.


What do you mean "buy some dividends"? Do you mean buy some shares?


> Dont go to a broker, cause they'll probably get a nice fat commission out of the money you pay over the years.


So how would you buy shares then if not through a broker?


> I'm self employed and healthy and happy, had life assurance for a while, cancelled it, foolish to think I'd get something back,


Did you read the terms & conditions of the policy that you signed? Did you get independent, professional advice? If not then I don't think it's fair to blame the underwriting institution for your mistakes.


> I didn't, instead putting more money into pension and also saving a few bob
> to enjoy, NOW. Remember there is such a thing as being over insured.
> You probably already have a mortgage protection policy.....


Some people will decide that they need/want life assurance. Obviously most owner occupiers are obliged under the _Consumer Credit Act _to have mortgage protection life assurance. They should shop around for the best deal. Others will decide that they need general (usually term) life assurance. For example due to having a spouse who is not earning and may be unskilled and/or dependent children who would be hit financially in the event of the death of the main/sole earner. It's facile to accuse life assurance companies or insurers in general of playing on people's fears. Obviously people need to objectively assess their own needs for such products but nobody is forcing them to buy them and there is an important thing called freedom of choice/free will.


----------



## KalEl (6 Feb 2007)

To be fair Clubman, many banks nowadays make going to a meeting with their life assurance people a condition of getting a loan. They then use pretty appalling tactics and it can be awkward/embarrassing to say no to some of their angles.
I'm speaking from experience...we had one nightmare with BOI. My girlfriend was actually quite upset. I just kept telling the saleswoman, as that what she was, to p..s off in not so many words.


----------



## ClubMan (6 Feb 2007)

KalEl said:


> To be fair Clubman, many banks nowadays make going to a meeting with their life assurance people a condition of getting a loan.


Isn't that illegal? At least the bundling of financial products is whatever about insisting on such appointments. Surely people should know better than to be browbeaten by salespeople whatever about even agreeing to meet them under duress in the first place.


----------



## KalEl (6 Feb 2007)

ClubMan said:


> Isn't that illegal? At least the bundling of financial products is whatever about insisting on such appointments. Surely people should know better than to be browbeaten by salespeople whatever about even agreeing to meet them under duress in the first place.


 
No, you're right... it's illegal to make taking one product a condition of getting another but these "meetings" are above board.

They should know better it is difficult to fight them off, and if going to the meeting is a dealmaker a first time buyer or indeed any buyer has to go along.

Our one was a complete joke...when she realised I was immune to her crap she started asking my girlfriend about me dying, being in a terrible accident or falling ill. The expense of funerals...ludicrous stuff.
On the one hand I thought it was pretty amusing but my girlfriend was quite upset. These "sessions" prey on the innocent and naive. She's a very smart girl but she would have signed up for some of the stuff.


----------



## demoivre (7 Feb 2007)

KalEl said:


> .
> On the one hand I thought it was pretty amusing but my girlfriend was quite upset. These "sessions" prey on the innocent and naive. *She's a very smart girl* but she would have signed up for some of the stuff.



.....you sure about that !


----------



## slave1 (7 Feb 2007)

> If you are both healthy, you would be better off if you just...


 
Present day health does not cover accidents or future illnesses, suppose if you're single there's a point, however if you have a better half and family the perspective changes


----------



## KalEl (7 Feb 2007)

demoivre said:


> .....you sure about that !


 
Lol...well she does live with me I suppose so you'd have to wonder!

Seriously though, I think turning to a 22 year old girl after getting no change from the guy and saying "imagine if he were in a terrible accident" is pretty low. "If he died funerals are quite expensive" is even worse!
It's easier to play on some people's fears than others...nothing to do with intelligence.


----------



## ClubMan (7 Feb 2007)

You/she should have made a complaint to the insitution about the salesperson's tactics.


----------



## KalEl (7 Feb 2007)

ClubMan said:


> You/she should have made a complaint to the insitution about the salesperson's tactics.


 
You're right...I should have.
It's too late now but how would one go about that? I mean, technically I could keel over or be in a terrible accident. Funerals are expensive. They weren't telling lies. Maybe the Financial Regulator recommends products like that shouldn't be pitched at 22 year olds?

I'd imagine they'd just say they were pointing out the risks of "life"?
This sort of hard sell is no doubt rampant in Ireland. At our NIB LTV "meeting" before Christmas we had a similar mandatory meeting but I just kicked everything to touch. Older and better at handling stuff I suppose.


----------



## ClubMan (7 Feb 2007)

If this sort of hard sell is rampant then I'm glad to say that I have never experienced it myself over the years.


----------



## Elphaba (7 Feb 2007)

ClubMan said:


> What do you mean "buy some dividends"? Do you mean buy some shares?
> 
> So how would you buy shares then if not through a broker?
> 
> ...



I thought dividends paid better? (Sorry I'm new)I'm sure its not impossible to buy shares directly, say from Bank of Ireland? Yes, got independent advice from a smooth talkin broker, 2 life ass. policies, 1 critical illness. You're right, knew what we were getting into. Decided it wasn't working for us after paying into it for 2 years, opted to pay more into pension instead. Did our parents have life assurance, or their parents? no they did not. They survived and so will most people.


----------



## ClubMan (7 Feb 2007)

Elphaba said:


> I thought dividends paid better?


Dividends are periodic payments made by some companies to shareholders. You don't buy dividends. You buy shares and you may get dividend payments as a result.


> I'm sure its not impossible to buy shares directly, say from Bank of Ireland?


 No - _BoI _would just be a stockbroker in this case even if you were buying _BoI _shares and their charges might well be higher than one of the smaller specialist stockbrokers. You can't buy shares "directly" in most cases other than from private companies or at _IPO (Initial Public Offering_). Otherwise you have to deal with a broker. Alternatively you could invest indirectly through a (preferably low charges) unit linked managed or index tracking fund for example.


> Yes, got independent advice from a smooth talkin broker, 2 life ass. policies, 1 critical illness.


 "Smooth talkin" sounds pejorative. If you didn't like the spiel why didn't you go elsewhere? What sort of broker - e.g. authorised advisor, multi-agency intermediary (if these classes existed at the time) or tied agent? In short how independent was the broker?


> You're right, knew what we were getting into. Decided it wasn't working for us after paying into it for 2 years, opted to pay more into pension instead.


 This is a bit confusing - life assurance and pensions are not really interchangeable products and each covers a different type of need.


> Did our parents have life assurance, or their parents? no they did not.


 Mine did. Some mysterious policy that they paid into for years and even when I was a child they couldn't (or wouldn't!) give me a good explanation as to what it was all for. 


> They survived and so will most people.


 This does not mean that life assurance is not suitable for some people particularly individuals with dependents such as I outlined earlier. So - in answer to the original question posed in the thread title, do you need it [life assurance]: it depends on your individual circumstances. To dismiss LA in most or all cases without reference to the individual's situation is meaningless.


----------



## RS2K (8 Feb 2007)

I think the op has a few misconceptions about Life assurance, which is the same as any other insurance fundamentally.

You pay premiums to cover a loss, in this case of a life.

Some people don't need cover. Single people without dependants for example. At the other end of the scale wealthy people with lots of assets might not need it either.

However take the classic example of a married couple with a house and young kids.  If either of the parents died there would be a massive financial loss. It might be loss of income, or loss of the labour of a home maker.  Either way the family costs remain the same or will actually increase. Insurance is a cheap and easy way of protecting against this loss at a reasonable price.

If you are healthy now that's great, but that could change in an instant. Some conditions mean you will no longer be insurable.

Life Insurance is not designed to make a profit for the policyholder. No insurance is.  

Savings plans are different animals completely.

Pensions are indeed very effective savings plans, with tax reliefs attached. The problem is what would happen if you died young before the fund was big enough to secure a decent standard of living for your family? Some life cover has tax breaks too did you know?

Commissions are a fact of life. The same as mark up in any other business. I think people can get really badly hung up on charges. Investment returns and sound advice are much more important.

Mortgage protection will only clear a mortgage. In the case of a stay at home mother, this will help in the event of her partners death, but will never be sufficient to allow her live. 

Just a few thoughts.


----------



## ClubMan (8 Feb 2007)

Good post _RS2K_.


----------



## Elphaba (8 Feb 2007)

ClubMan said:


> Dividends are periodic payments made by some companies to shareholders. You don't buy dividends. You buy shares and you may get dividend payments as a result.
> No - _BoI _would just be a stockbroker in this case even if you were buying _BoI _shares and their charges might well be higher than one of the smaller specialist stockbrokers. You can't buy shares "directly" in most cases other than from private companies or at _IPO (Initial Public Offering_). Otherwise you have to deal with a broker. Alternatively you could invest indirectly through a (preferably low charges) unit linked managed or index tracking fund for example.
> "Smooth talkin" sounds pejorative. If you didn't like the spiel why didn't you go elsewhere? What sort of broker - e.g. authorised advisor, multi-agency intermediary (if these classes existed at the time) or tied agent? In short how independent was the broker?
> This is a bit confusing - life assurance and pensions are not really interchangeable products and each covers a different type of need.
> ...


Jeez clubman, give me a break. I'm only killin time before I'm allowed shoot the breeze which is much more fun than talking about insurance!
Anyway, the smooth talking broker, (a tied agent)I suppose played on my fears of an early arrival of the grim reaper or the grim reapers side kick,
'serious illness' (have to look up perjorative in the dictionery)
I was annoyed that I let him talk us into policies we really couldn't afford in the first place. To be fair they wern't bad policies. (Doh! Yes I understand the differnece between LA and a pension.) I'm not dismissing LA
entirely, but there are lots of other things you can do to assure a good life.
Invest in your quality of life i.e. holidays, time off, exercise. Invest in your children so that they grow up to be financially independent human beings. If you can afford LA and it gives you peace of mind, then get it. But life is for living, not for hoarding away cash that you'll never see anyway cause you'll be dead and hopefully by that time your kids will be financially secure
and the mortgage paid off......In relation to LA playing on your fears..just look at the ads on telly.... look behind you....do you see a footprint there?


----------



## ClubMan (8 Feb 2007)

Elphaba said:


> Jeez clubman, give me a break. I'm only killin time before I'm allowed shoot the breeze which is much more fun than talking about insurance!


Eh? 


> Anyway, the smooth talking broker, (a tied agent)I suppose played on my fears of an early arrival of the grim reaper or the grim reapers side kick,
> 'serious illness' (have to look up perjorative in the dictionery)
> I was annoyed that I let him talk us into policies we really couldn't afford in the first place. To be fair they wern't bad policies. (Doh! Yes I understand the differnece between LA and a pension.) I'm not dismissing LA
> entirely, but there are lots of other things you can do to assure a good life.
> ...


Sorry - I don't really get the point of most of this. As I have said, in my opinion, _LA _is perfectly suitable for some people especially those with dependents who would be financially hit if one of the main providers/carers/earners died. Personally I have had no experience of the hard sell and I don't find the _TV_/media advertising for such financial products particularly objectionable.


----------



## RS2K (9 Feb 2007)

Another issue is that a tied Agent is not a Broker.

He/she can only sell one companies range of products, irrespective of how competitive or otherwise they might be.

I agree on a couple of the op's points about investing in living, time off, kids, etc. That's all good stuff. But saying "....But life is for living, not for hoarding away cash that you'll never see anyway cause you'll be dead and hopefully by that time your kids will be financially secure" is profoundly naive.

Paying for Life assurance isn't hoarding money away, it's about protecting against premature death, and providing for your dependants should this happen.


----------



## KalEl (9 Feb 2007)

RS2K said:


> I agree on a couple of the op's points about investing in living, time off, kids, etc. That's all good stuff. But saying "....But life is for living, not for hoarding away cash that you'll never see anyway cause you'll be dead and hopefully by that time your kids will be financially secure" is profoundly naive.


 
It's how people think when they're young and single...21 and bulletproof. Give it a few years!


----------



## terrysgirl33 (9 Feb 2007)

Unfortunately I know of a few families where one of the parents died while the children were under 20, and life insurance made the difference between dealing with a terrible financial situation at the same time you were dealing with a dreadfull emotional situation, and just dealing with a dreadfull emotional situation. 

I agree about the hard sell, we are in the middle of a remortgage, and the bank have been very keen for us to meet with their insurance salespeople.  But we just said no.  Straight life assurance, with no income protection, is quite cheap.  Mortgage cover for 130k for two adults (one smoker) is coming in at ~€250 a year, which is not a lot for peace of mind.


----------



## Rico (9 Feb 2007)

This gripe is more about sales methods than life assurance. Pressure salespeople  come across in all aspects of life and there is a way to deal with them. A good salesperson communicates information well to enable the consumer to make a choice.

With regard to Life Assurance and similar products this is now heavyily regulated to protect the consumer. Also look at an Independent financial advisor who will work for your best interests. He has to paid for his advice and skill like everyone else. 

Assurance/Insurance is a vital protection, the level depends on each persons circumstances. Some People only really see the value when the event has happened and then bemoan the fact they werent made aware of it by the Government, The Insurance Industry, their aunty/uncle etc.


----------



## ClubMan (10 Feb 2007)

Rico said:


> This gripe is more about sales methods than life assurance. Pressure salespeople  come across in all aspects of life and there is a way to deal with them. A good salesperson communicates information well to enable the consumer to make a choice.


I agree - I think that this (the marketing and sales approach) is more the nub of this specific complaint than the products themselves which are obviously relevant and applicable to some people.


----------



## bond-007 (13 Feb 2007)

What would a lender do if you became uninsured after taking out a mortgage?


----------



## ClubMan (13 Feb 2007)

Owner occupiers (with some minor exceptions) are legally obliged to have mortgage protection life assurance in place under the _Consumer Credit Act_. I'm not sure what happens if you let the cover lapse but I presume that the lender will be informed (e.g. by the _LA _underwriter) and they will act to ensure that the borrower restores the cover.


----------



## RS2K (14 Feb 2007)

Yes as the assignee (owner) of the mp policy the lender will be informed of lapsed premiums by the insurer.


----------



## bond-007 (14 Feb 2007)

But what can they do to force cover to continue? They can hardly repo the house if the payments are up to date?


----------



## KalEl (14 Feb 2007)

bond-007 said:


> But what can they do to force cover to continue? They can hardly repo the house if the payments are up to date?


 
As Clubman said it's an offence under the Consumer Credit Act not to have a mortgage protection policy so you'd end up in court without a leg to stand on.


----------

