Lack of Life Insurance Cover Creates GBP2.4 Trillion Protection Gap in the UK

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BRIGHTON, ENGLAND, May 05, 2012 /24-7PressRelease/ -- Research highlighted by Barclays raises concerns that nearly two thirds (60 per cent) of adults in the UK do not have life insurance, which could mean that Britain is facing a protection gap in the UK insurance market of GBP2.4 trillion.[1]

According to new research by Barclays, the main reasons for not taking out life insurance were the increasing pressures on household expenditure and needing to cut back (42 per cent), separating from a partner (27 per cent) and a quarter believing it's a waste of money.

To help customers better protect themselves financially, should the worst happen, Barclays is encouraging customers to review their protection needs and is offering three months cash back to customers who purchase a life insurance policy between 21 April and 1 June 2012*.

Kieran Murphy, Managing Director, Barclays Insurance said: "Many people have a natural blind spot regarding the financial security of their dependents should they unexpectedly not be here tomorrow. However, it's really important people consider how their dependents would cope financially should the worst happen.

"Life insurance and knowing your family are protected is really valuable and obtaining the right level of cover needn't be too costly. We know that household budgets are really tight at the moment, but it's important that protection needs don't slip down the list of priorities."

Barclays Life Insurance provided by Aviva is a comprehensive policy, providing customers with affordable and reliable cover, with a number of additional features:
- Simple, great value life insurance from Aviva pays a lump sum of up to GBP500,000
- 16 per cent discount when you buy online, in addition to the three months cash back offer - apply online and be covered in just 15 minutes
- Choose either level term or decreasing term cover
- Monthly premiums from only GBP5 a month (just 17p per day)
- A 35-year-old non-smoking woman could pay GBP13.18 a month for GBP250,000 of level term cover for 25 years
- Your monthly premiums stay the same throughout the life insurance policy term

Barclays Life Insurance provided by Aviva policies can be purchased at any Barclays branch, telephone banking and via www.barclays.co.uk/insurance

Notes to Editors:

[1] Swiss Re 2009
Methodology: Opinion Matters survey of 1267 UK adults (3-10 April 2012)

*Three Months Cashback : Customers who complete an application for life insurance policy provided by Aviva during the offer period (21 April and 1 June 2012) and where both the policy is still current after three months and all policy premiums have been paid to date will qualify for a rebate (refund) of their first three months premiums paid.

From GBP5 per month a 35 year old male nonsmoker could get circa GBP30,000 worth of cover (20 years level term cover) with Barclays Life Insurance. But if that individual earns GBP20,000 a year this could only provide enough to support general living expenses (bills, food, car, etc) and any existing commitments (mortgage, credit cards or loans) for no more than two years, without putting more pressure onto the family's lifestyle. However, for an extra pound a month the same 35 year old individual could more than double their level of cover (GBP78,000).

About Barclays

Barclays is a major global financial services provider engaged in personal banking, credit cards, corporate and investment banking, and wealth and investment management.

With over 300 years of history and expertise in banking, Barclays operates in over 50 countries and employs over 140,000 people. Barclays moves, lends, invests and protects money for customers and clients worldwide.

For further information about Barclays, please visit our website www.barclays.co.uk

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Peliculas Online

YOUR MONEY: Want Better Car Insurance Rates? You Have to Make the Call - Your Money

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Most consumers know that they aren’t going to get a courtesy call from their service providers telling them they qualify for a better deal. Yet they still fail to review their policies or contracts each year to make sure they’re getting the lowest rates possible.

Well, Mr. Mitchell’s accidental victory may provide just the needed incentive.

After retiring last summer from a long career as a programmer, Mr. Mitchell said he knew he should review his expenses and try to trim whatever he could. His hefty auto insurance premium on his two cars — he was paying $2,537 a year — seemed a juicy potential target. But he said he “dillydallied,” and didn’t call his insurer, Liberty Mutual, until a couple of weeks ago, shortly after AARP contacted him by mail and urged him to call The Hartford for a free quote on his auto insurance.

And it was a good thing he decided to call. The Hartford told him it could offer him a policy with the same coverage for just half — yes, half — the amount he was paying Liberty Mutual, or about $1,267. Mr. Mitchell said he contacted Liberty Mutual with the news. And wouldn’t you know, the representative told him that it had revised its underwriting standards and he would now qualify for a premium of $1,207.

“I was happy to get the reduction, but I was dismayed to learn that the burden was on me, which means there are probably thousands of policy holders who are eligible for this but don’t know what they don’t know,” said Mr. Mitchell, who was insuring a 2002 GMC Envoy and a 2010 Toyota Prius. “It is a rip-off.”

Even more maddening, he said, was the conversation that ensued with a Liberty Mutual branch manager. Mr. Mitchell said he was really irked that the company was perfectly content to let him continue paying twice as much as he needed to, so he asked the manager if the company would have bothered to notify him of the “underwriting changes” when his policy came up for renewal this summer. “To my astonishment, he admitted that the premium reduction would not have been brought to my attention unless I asked for it,” he said.

Mr. Mitchell, who lives in Cave Creek, Ariz., is exactly the kind of customer you would expect Liberty Mutual would want to keep. A loyal client since 1973, he said he had a clean driving record with no accidents — just a few broken glass claims — and a credit score above the enviable 800 mark. Besides the auto coverage, he also has a homeowner’s insurance policy with the company, which Mr. Mitchell thought might have worked in his favor to secure the reduced rate, since insurers often offer multipolicy discounts.

Liberty Mutual, not surprisingly, declined to get into specifics with me about Mr. Mitchell’s situation, and provided a corporate-stamped response: “We continually refine and enhance our ability to most accurately price each customer to reflect their individual risk, based on a large number of factors, and as a result a customer’s price could move up or down,” Glenn Greenberg, a spokesman for Liberty Mutual, said in an e-mail. “We regularly advise our customers upon policy renewal that they may call us to discuss their coverage, benefits and discounts.”

And that drives home the point: the onus is always on you, the consumer, to do the heavy lifting, whether it’s a big-ticket item like auto insurance or smaller bills from your cellphone or cable provider. It’s a simple lesson, yes, but one that is worth remembering every so often. Of course, even when you make the time, finding the best deal isn’t necessarily easy.

J. Robert Hunter, the director of insurance for the Consumer Federation of America, an advocacy group, said he wasn’t at all surprised by Mr. Mitchell’s experience. After all, insurers aren’t required to let you know when you’re eligible for a lower rate, and it’s hard to know if you’re getting the best deal (though in California, insurers must sell their lowest-priced policies to those deemed “good drivers,” or people who have been driving for at least three years and have no more than one violation and no serious accidents on their record). “If you shop for insurance, it is quite easy for one insurer to be half the price of another, even in the same group of insurers,” Mr. Hunter said. “It is very difficult to be sure you have the best price,” he added, noting that many agents are working on commission, where higher premiums might translate into more income for the agent.

(Sales people typically collect roughly 8.5 percent of the premium, on average, said Robert Hartwig, president and economist at the Insurance Information Institute, an industry group, but noted that direct-to-consumer companies often spend much more on advertising).

With the exception of New Hampshire, all states require drivers to have liability insurance, which pays for the other driver’s medical expenses, car repairs and other costs when the policyholder is at fault. (Florida requires drivers to buy insurance that covers the occupants in the driver’s car.) The minimum amount you must carry is set by state law, but many drivers choose to buy more coverage to protect their assets in the event of a costly accident.

Still, about 14 percent of drivers went uninsured in 2009, according to the Insurance Research Council, at least in part because some drivers cannot afford the insurance (Mississippi takes the prize for the state with the highest estimated rate of uninsured drivers at 28 percent, while Massachusetts and Maine have rates of only 4.5 percent. New York doesn’t trail too far behind, at 5 percent).

Your insurance rate is probably based on a variety of factors, including your age, gender, marital status, education level, occupation, the type of car you’re driving, where you live and your credit score. Of course, your driving record is also taken into account, as well as how much you drive. (A recent report, co-written by Mr. Hunter of the consumer group, contends that these pricing methods often work against lower-income drivers.)

As you shop around for a new (or better) quote, you should also consider factors beyond price alone, including the insurer’s rating and responsiveness to claims, Mr. Hartwig said. You can typically find that information, including price comparisons and local consumer guides, on your state’s insurance commissioner’s Web site. New York State’s Department of Financial Services, for instance, ranks 40 insurance companies by the number of complaints upheld against them as a percentage of their premium.

The average premium paid per car — for liability, comprehensive and collision coverage — was about $901 in 2009 (the latest figure available), according to the National Association of Insurance Commissioners. But judging from Mr. Mitchell’s situation, you’re likely to encounter a wide range of prices.

Mr. Hunter said that consumers should specifically ask the insurer — not the agent — whether they were being offered the lowest rate they qualify for, or they should ask the agent to ask the insurer. And he suggested asking for it in writing.

“I was working on the assumption that they were all the same,” Mr. Mitchell said.

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Peliculas Online

Income Insurance for 80-Somethings

A relatively new product, known as longevity insurance, allows you to put money on those odds — and the longer you can beat them, the more money you stand to collect. But the point isn’t about making a ghoulish gamble. The insurance is a way to protect you from running out of money should you live to a ripe old age, though it turns your retirement years into something of a contest with the insurance company.

At its core, longevity insurance is simply a deferred annuity: you hand over a pile of cash to an insurance company, usually around the time you retire. But the guaranteed payments begin much later, usually around 80 or 85, and last for the rest of your life. As with homeowner’s policies and other types of insurance, the idea is to give up a smaller amount of money now, for a potentially larger payout later.

Though many retirees are loath to part with thousands of dollars for a benefit they may never receive, some baby boomers may decide it’s worth the gamble. Consider this: for a healthy 65-year-old couple, there is a 50 percent chance that at least one of them will live until 92, according to the Society of Actuaries.

Even if you don’t live that long, the insurance removes some of the uncertainty of how much you can afford to spend in retirement. If you know you have a guaranteed stream of income that will kick in at age 85, for instance, you may be able to spend down your portfolio a little more aggressively before then. The idea is to buy enough insurance so that you’ll be able to maintain your lifestyle after the payments begin.

“I think it is going to be one of the most important investment vehicles of the next decade,” said Harold R. Evensky, an independent financial planner in Coral Gables, Fla., who has been critical of annuities in the past. “There is no question that a large percentage of the public will be facing a problem maintaining their lifestyle in retirement as daily expenses and inflation erodes their nest egg.”

As attractive as the product sounds, at least in theory, there are several caveats. The biggest drawback, obviously, is that you may never recoup your initial premium. Some companies allow your heirs to receive some or all of your money, but adding those features can double your costs. It may be more cost-effective to view the annuity as a pure insurance policy.

“Unlike other annuity products, this has more in common with fire insurance,” said Christopher O. Blunt, an executive vice president at New York Life. “To leverage it properly, you don’t want to think of it as an investment. You want to think about the risk of running out of money and how devastating that would be, and how much money you would have to put up to take that risk off the table.”

Given the odds, it’s cheaper to buy longevity insurance than to build, say, a bond portfolio that will produce the same amount of income, experts said. It is also significantly less expensive than buying an immediate annuity, whose payments begin right away. It’s hard to generalize, but Jason S. Scott, the managing director of the Financial Engines Retiree Research Center who has analyzed longevity insurance, said that retirees might consider carving out about 15 percent of their retirement savings to buy the insurance.

At the Hartford Financial Services Group, for instance, it would cost a 65-year-old man $18,425 to buy $1,000 in guaranteed monthly income that begins at age 85, compared to $23,272 for a woman. It would cost $33,203 to cover both partners’ lives — which is much less than the $211,000 they would need to buy an immediate annuity. The longer you wait to collect the income, the lower your premium.

There are risks to consider. Since your payments don’t begin for many years, perhaps even decades, inflation can diminish your future payments’ purchasing power. Social Security, which increases with inflation, will provide a partial hedge. But it may pay to buy a larger amount of income, especially if you believe most of your expenses will be vulnerable to inflation, said Mr. Scott of Financial Engines. If you don’t expect to receive the income for 15 years, you might increase the amount you need by 2 to 3 percent a year over that time period to arrive at an inflation-adjusted number, he added.

Another big question is the financial stability of specific insurance companies many years in the future. That’s why financial planners suggest buying annuities from several providers. Should a company fail, the states have guarantee associations that would provide coverage up to certain limits -- typically $100,000 to $250,000 -- based on the value of your projected annuity benefits.

Here is a look at what types of longevity insurance are available or coming soon:

This article has been revised to reflect the following correction:

Correction: November 15, 2010

An article in the Your Money special section on Nov. 5, about longevity insurance, a product that allows people to insure against outliving their retirement assets, described imprecisely the benefits of a state guarantee association should an insurance company fail. The association would provide coverage based on the value of the insured’s projected annuity benefits; it would not be based on the amount paid for the insurance and thus would not necessarily “pay back the amount you invested.”

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