FSA names top five insurance questions

New figures from the FSA show that people are savvier when shopping for home gadgets than they are when searching for life insurance to protect their families.

During research to devise a checklist of five questions to help people when shopping for insurance, the FSA uncovered worrying consumer trends.

Over two thirds of people (69%) said they hated shopping for insurance and more than half of those polled (52%) found it too complicated to compare insurance products.

The checklist of five questions is:

Are you covered already? 49% of people in our survey said they never quite know what they're covered for.

Must you buy insurance when it's offered with something else? 1 in 4 thought it was compulsory to buy travel insurance when buying a holiday from a travel agent. It isn't – you can shop around.

Have you shopped around? 52% of people find it too complicated to compare one product against another. And 46% don't know if they are getting a good deal.

Do you know what will you be covered for? In the survey we found that 52% of people rarely, if ever, checked their life insurance policy details to make sure it provides them with adequate cover.

Have you given your full details? 52% of people assumed that insurance companies would make it difficult to get a claim settled. However, customers have a responsibility to give their full details because the deal they make with the insurer is based on the information they have provided.

To help consumers cut through the confusion, the FSA's jargon-busting website www.moneymadeclear.fsa.gov.uk has been designed in response to the need for clear, impartial information on money matters.

Vernon Everitt, director of retail themes at the FSA, said: "Insurance plays an important part in protecting our families, homes and possessions. But as with all financial products, consumers need to be capable and confident in making the right choices, including shopping around for the best deal and asking the right questions. Our jargon-free information will help empower consumers to do just that."

HIP Scrapped

A motion to scrap home information packs (HIPs) has been approved in the House of Lords, after a vote went narrowly against the Government.

The motion, which was approved by a vote of 180 to 160, is not fatal to the initiative however. Baroness Hanham for the Conservatives led the debate, and described HIPs as a “ridiculous policy”.

She added: “Without the energy performance certificate, what does the HIP give you? Remarkably little. It does not produce anything much and, despite all the efforts of the Minister and the Government, it still has not improved an enormous amount on the way through the system. There should be a complete rethink about the energy performance certificates. They should be introduced on their own. They should not be part of the HIP process, which does not look as if it will be of benefit to buyers.”

Mike Ockenden, director general of the Association of Home Information Pack Providers commented: “Despite this latest vote, which went against HIPs by a small majority, it is reassuring that Government’s resolve, has not been shaken. Clearly Tory politicising is not going to get in the way of delivering this vital reform to the benefit of consumers and the environment.”

Excerpt from Mortgage Solutions UK. 19.07.07

Do you really need to be rich to face inheritance tax?

Many people mistakenly think inheritance tax (IHT) is solely the preserve of the rich and won’t affect them.

The truth is, with continually rising house prices an inheritance tax liability is becoming an increasing possibility for more and more people.

What’s more, if someone dies without having made a Will it can lead to legal complications over exactly who benefits from an estate, even resulting in the State taking a significant share on top of any IHT due.

Financial adviser and stockbroker in London said: “Many people don’t realise how much their estate can amount to once everything is taken into account – house, car, possessions, business interests, savings, shares, jewellery and so on. It’s very easy for an estate to be worth a lot more than the current £300,000 inheritance tax threshold, with tax charged at 40 per cent on everything above this limit. So, for example, an estate worth £500,000 would leave a tax liability on the balance of £200,000, meaning £80,000 would have to be paid before the estate was released to beneficiaries.

“It’s also wrong to assume on death everything passes to ones nearest and dearest. This is often simply not the case. But interests can easily be safeguarded by making a Will and taking advice. It is simple, inexpensive and can also help limit any inheritance tax liability.”

Beat the Rate Rise

I got this write up from what mortgage website and is written by Jennifer Lowe. I find this one so important because of the continuous increase of interest rate that's why I'm sharing this one to all of you.

As expected by many and predicted by the so called "experts", the interest rate was increased today by 0.25 per cent, leaving many homeowners in a financial pickle.

The Bank of England has confirmed today that interest rates will rise to 5.75 per cent, adding an extra £16 a month on an average £100,000 repayment mortgage and £23 per month to a £150,000 home loan.

And many experts are predicting more increases before the end of the year, but here’s what you can do to protect yourself.

If you're paying your lender's Standard Variable Rate (SVR), switch!

If your mortgage deal has run out, you will no doubt be currently paying your lender's SVR.

As one of the most expensive ways to borrow, you must start looking for a cheap deal immediately and remortgage!

If you don't like surprises, fix.

The most obvious solution to avoid the pressure of rising interest rates is to opt for a fixed rate mortgage. This way, you’ll know how much you’ll be paying for a set amount of time and be shielded from any future increases.

And with many industry experts hinting and more rate rises this year, fixing your mortgage is a very sensible idea. Although, if predictions are wrong and rates fall you won’t benefit.

If you have Savings, try offsetting your mortgage

With rising inflation, it can be almost impossible for taxpayers to make money on a variable rate savings account, especially if they pay higher rate tax.

Rather than keeping your cash in a savings account (which is taxable), by linking it to your mortgage the cash can work to reduce your debt. As most modern mortgages calculate interest on a daily basis, every pound will work to reduce the interest payable on your largest debt, no matter how short a period of time it is in there.

And whilst the money is used to reduce your mortgage debt during the time it is in the account, it can still be withdrawn at any point -- just like traditional savings