Short guide to motor insurance

Motor insurance is a legal requirement in the UK, but the market is still an extremely broad one thanks to a large number of providers. Your policy will be dictated to an extent by the type of car you drive. Someone who has a high specification brand new Mercedes’ costing £100,000 is usually going to pay more than somebody driving a very old Rover, no matter what their age, but by following a few simple tips people can at least keep their costs to a minimum. There’s also a galaxy of add-ons and extras out there, which when compared like for like, can help someone to get a better deal.

A car insurance policy itself comes in three basic levels. Third party only is the minimum legal requirement, and only pays out for damage caused to someone else’s vehicle in an accident. Third party fire and theft does the same but also covers against, as the name suggests fire and theft, and fully comprehensive covers against just about any realistic threats to your car you can imagine.

Third party only might seem somewhat extreme and threadbare, but it can be relevant for people who have a car of a very low value. Car insurance policies also come with excesses, which are initial amount you agree to pay in the event of making a claim. So an excess of £400, means the driver will have to pay £400 towards the cost of any repair bill of around £1000, to give an example. Imagine your car is only worth £1,000, with an involuntary excess of £400. This means you can only really claim for £600 worth of repair costs from your insurer - depending on premium costs, you may only want third party in such a circumstance. Of course, at the other end of the scale, an older driver who has a brand new BMW worth £20,000 pounds may decide fully comprehensive is the best option for them.

Car insurance is widely available and can be picked up from high street insurance companies, specialist motor providers, and even supermarkets. Shopping around is often the best option as quotes can vary wildly. Remember all insurance companies calculate risk and what they charge you is based on how likely they think you are to make a claim. Therefore anything which reduces the likelihood could help your policy also go down.

Buying and using a steering lock, installing an effective alarm, immobiliser and even a tracking device could significantly affect your premium. Where you live is also important as areas which have a history of high car crime and vandalism understandably attract higher premiums. A simple way around this is to park your car on a drive or garage if you have access to one. Keeping a vehicle off the public highway is always seen as making it less likely to be damaged or broken into.

Motor insurance policies can also come with things like breakdown cover included. The quality of this will vary and things to look out for when comparing include whether or not it features a home start option, and recovery to the nearest garage. It is also worth looking at what its options are for travelling abroad. Those who like to motor on the continent or in Ireland may want to find something which covers them when on holiday.

Your motor insurance should also provide you with adequate cover for things which might be stolen from your car. Those who perhaps carry expensive laptops in the boot due to business reasons may want to make sure the level of potential payout is sufficient.

Unemployment cover to protect your finances

Many people have experienced the trauma of unemployment. Even if they haven’t, they very probably have had cause to worry at times about the possibility of unemployment and what the absence of regular income would mean for them and their family.

Although many organisations are sympathetic to a change in personal circumstances and will make some allowances for such things, the harsh reality is that mortgage, heating, electricity, car, credit card and food costs do not just disappear in the unfortunate event of redundancy.

The insurance marketplace offers a range of insurance products aimed at this eventuality – policies that help people cope with a loss of income. Even when they are in regular and theoretically safe employment, many people feel more relaxed in their normal day-to-day lives knowing that they have such cover in place.

Depending upon personal circumstances and even luck, it could be beneficial to have this kind of cover in place to cope with the unexpected.

Payment protection insurance (or PPI for short) is a generic name for a product that protects your finances in the event of you becoming unable to work due to incapacity (accident or sickness) or involuntary redundancy.

You can choose to protect against the financial fallout of either of these events (ie accident, sickness and unemployment – also known as ASU insurance); incapacity cover only; or unemployment cover only.

With all these variants of cover, you will typically receive a tax-free regular monthly income that will help you keep your head above water financially should the unexpected happen.

You can get debt specific payment protection insurance policies that help to meet the cost of loan or mortgage repayments (known as loan payment protection insurance and mortgage payment protection insurance respectively).

These types of insurance are linked to a given expense such as a policy that will continue to pay car instalments in the event of income being lost. Many PPI policies will pay the funds directly to the company that owns the debt such as the policyholder’s car finance company or furniture HP company etc. Some PPIs are sold at the same time that the car or furniture is purchased or a credit card opened.

Or you can get a general income to be used for whatever purpose you wish, called income payment protection insurance.

General-purpose unemployment insurance can be expensive if bought directly from a lender. However, a good deal can often be sourced from a standalone provider.

When buying unemployment cover, do note that there are exclusions so it may not be freely available to all applicants. Typically you will need to have been in full time regular employment for at least six months.

Some careers or industry sectors may be seen as volatile with a high risk of redundancy. The over 50s may also be deemed to be at higher risk of redundancy that those under 50. In such cases the insurance premiums payable may be significantly higher than normal. Again, using a standalone provider may help get a low cost solution.

Applicants, who have a fragmented or missing recent employment record, in part time employment, working overseas or in some types of self-employed occupation, may find it difficult or very expensive to obtain this type of insurance.

Typically unemployment insurance policies will have a limitation upon the maximum amount they will pay and over what period. As an example they may only cover up to a maximum of 50% of normal monthly income. They may also have a ‘qualification period’ that prohibits claims for the first 6 or 12 months after opening the policy. Some may only commence payments 30-90 days after redundancy and many will not offer this type of cover at all if the policyholder already has a similar policy in place with another company.

Finally, in terms of cover and claims, in general an unemployment cover policy will not pay out in cases of voluntary redundancy or resignation. Some may have exclusions relating to dismissal in general or dismissal for certain categories of reason such as criminal behaviour.

When a claim is lodged, to prevent fraud they will also ask to see all copies of key documents from the employer including the statutory notice of redundancy to examine all dates, payments and reasons.

In summary these insurance policies may be of value but the details and conditions of the policy must be closely examined to ensure that there is a good match to the policyholder’s needs.

• Unemployment Insurance typically provides monthly income in the event of some types of loss of income due to unemployment.
• Unemployment insurance may be advantageous but it can be expensive when bought from high street banks and lenders and not always available to all.
• Insurance companies will only meet claims where the unemployment is deemed to have arisen for reasons beyond the policyholder’s control.

Instant Access Accounts explained

The banks and building societies offer quite literally hundreds of different savings accounts and products all designed to encourage the customer to save with them.

These products vary significantly from one to another and their suitability will depend very much upon a customer’s individual circumstances and needs.

There isn’t space here to describe them all but one classic offering is ‘the savings account’. This type of account will often break down into two basic types:

• Those that normally ask the customer to give some notice before the savings are withdrawn – typically these will be called 30, 60 or 90 day accounts to indicate how much notice the customer will need to give before they can gain access to their savings.

• Instant Access Accounts. These usually offer immediate and unrestricted access to savings via cheque, card or ATM etc.

Notice accounts are the traditional savings products that institutions have offered their clients for centuries. As the customer normally has to give a notice period before withdrawing funds, the bank or building society will therefore be able to keep the money for a longer period ‘on average’. This means they often offer customers a higher rate of interest with notice accounts than on some other types of savings accounts or products.

These sorts of savings arrangements may not suit all savers though. In today’s world people sometimes want faster and unrestricted access to their savings and having to wait 30, 60 or 90 days is not always convenient.

So the Instant Access Account was developed to offer the customer more choice.

Instant Access Accounts were designed to be very flexible. They often seek to offer customers a better interest rate than that available with a normal ‘current’ banking account AND instant, or more or less instant, access to the funds when they need them. This can prove very useful to some customers, although on the whole Instant Access Accounts may offer lower interest rates than those available through the Notice Account savings schemes.

The world of financial services moves fast though and new offerings are continually appearing. To some extent, the differences between notice period and instant access accounts are diminishing.

Over recent years new types of Instant Access Account have appeared. These are ‘hybrids’ that are a mixture of the traditional Notice and Instant Access accounts with features of both.

Some of these new Instant Access Accounts may offer the higher interest rates usually found with the traditional notice accounts, while at the same time offering more flexible access to the savings.

They may offer, for example, 3 free withdrawals a year without risking a reduction in the interest rate paid on savings.

In the final analysis, the banks and building societies will usually have available a product or service that will meet the needs of those savers looking for a good interest rate coupled with flexible access to their funds. This may be one of the familiar ‘Instant Access Accounts’ or one of the newer hybrids.

• Instant Access Accounts usually offer higher rates of interest than current accounts.

• Notice Period Accounts usually offer higher rates of interest than current or Instant Access Accounts.

• Instant Access Accounts typically give immediate and unrestricted access to the savings if needed.
• New hybrid accounts have emerged which have some characteristics of both Notice and Instant Access accounts.

Mortgage Life Cover explained

No one likes to think about death, but it’s a question that has to be faced: will your loved ones be protected financially should you pass away suddenly? Will they be able to maintain a decent standard of living? Could your spouse handle the mortgage or loan repayments on his or her own? Thankfully, there are a lot of products on the marketplace that can help make sure your nearest and dearest will be taken care of financially in the event of your untimely death.

There are generally speaking, two types of life insurance: Life Cover, and Mortgage Life Cover. Life Cover pays a fixed cash sum upon your death in return for a monthly premium. Mortgage Life Cover, on the other hand, is an alternative to Life Cover that is aimed at protecting what is likely to be your biggest financial commitment – your mortgage.

The longer you keep a mortgage (and assuming you keep up with the repayments), the less you owe to the bank or building society that provided you with a loan. Mortgage Life Cover is a form of life insurance that is tied into the amount you still owe to the bank; the longer you hold the insurance policy without dying, the less money your beneficiaries will receive upon your death, designed to balance pretty much with the amount you still owe on your mortgage (as opposed to Life Cover, which will pay the same amount no matter how long you hold the policy for). While this sounds like financial trickery on the part of the banks – how can it be better to receive less as the total amount of money you’ve paid in via monthly premiums increases? – the average monthly premium for Mortgage Life Cover is considerably lower than an equivalent Life Cover package, and so may be tempting if you feel the need to have some form of life insurance but don’t think you can afford a particularly expensive policy.

As ever, there are several types of policy available. As with most Life Cover policies, the majority of Mortgage Life Cover policies include a Terminal Illness Benefit at no additional charge, designed to pay out a lump sum then and there should you be diagnosed with a terminal illness and given less than a set amount of time (usually 12 months) to live. Similarly, it’s possible to get joint policies that include both you and your partner, which generally pay out upon the death of the first insured party. There are some caveats to this – not all companies offer this service, and others won’t honour this in the latter months of a policy (for example, during the last 18 months of your term) – and so it’s important to make sure you know exactly what you’re buying before you sign a contract.

For various reasons, not everyone feels as though standard Life Cover is suitable for them. However, checking out the possibility of purchasing a Mortgage Life Cover can prove to be the best of both worlds: the cost of monthly premiums can be much reduced, and you can still have the peace of mind that comes from knowing your family are protected financially in case the worst happens.

Why choose medical insurance?

A medical insurance policy can be appealing to anyone who wants to avoid the NHS queues and get treatment for non-threatening but inconvenient conditions quickly. Choice is the key benefit, as policyholders can often choose when and where they are treated. They can even select the Doctor who treats them in some cases. This is in complete contrast to the public health system, where the date, time and location of consultations and procedures will often be totally inflexible.

A standard medical insurance policy normally entitles someone to cash to cover costs of tests, overnight accommodation, consultations and treatment in a private facility or a private wing of a hospital which is otherwise NHS-run. Private hospitals usually mean private rooms and a better general standard of interiors, plus a better quality of food.

Different levels of cover are available, with the costs increasing accordingly. Someone’s age will normally also dictate what they pay, as older people are statistically more likely to need to claim on their policy. As with other types of insurance, people who agree to high voluntary excesses are more likely to be able to get a discount.

Another way to keep costs down is to agree to certain exclusions. For starters you will not normally be covered for any pre-existing medical conditions, meaning any problem which you have suffered within the past before taking out the policy. But you can also add to this, by perhaps agreeing that leg operations may not be claimed for, possibly lowering the cost. If you are prepared to agree to a smaller choice of hospitals, for example, perhaps five instead of 15, you may also be in for a discount from the provider.

Shopping around is often the best way to go when choosing medical insurance, and although it is potentially a more emotive subject, it may be beneficial to even look for a policy as you would search for cover for your car. Comparing different features like for like can reveal the plus and minus points of some of the cheaper products. Ironically, as with car insurance, some companies offer no claims discounts to people who do not claim on their medical cover for set periods.

Of course, the best way to reduce your chances of having to claim is to lead a healthy lifestyle. This is obviously physically beneficial as well as financially. Insurers may charge more for people who are smokers or who are overweight. So quitting cigarettes and changing your diet may even lower your policy. Medical insurance is available for individuals, but can also often be applied to couples and even families. A husband and wife can take out a joint policy, which will normally work out cheaper than if they both had separate products. Although the NHS remains an efficient service which will treat anyone regardless of their financial background, a private policy can take away some of the stress and inconvenience associated with getting regular problems sorted. Waiting lists for standard operations can stretch for months, but private cover can see someone treated within weeks or days.

Six Tips to Help When Buying a Second Home Abroad

A lot of people see buying a second home aboard as an impossible dream, and one that’s well out of their reach. However, this doesn’t have to be the case. Here are a few tips to make owning your own little piece of foreign property a lot more attainable:

1. Choose your location wisely.
Before you make any major plans, your first consideration should be where you want to move. Start with the country. Can you imagine making another nation your second home? Do you like to travel to different places when you go on holiday, or would you be happy to spend a good chunk of your off-time in one place? If it’s the former, you may be better not buying a property at all. Similarly, consider your ability to fit in. Do you speak the language? Can you afford regular enough trips out to make it worthwhile? Similarly, make sure you know the region will suit you. Would you prefer a touristy area, or somewhere a little further from the beaten track? Pick a location that meets your needs, or you’ll likely struggle to find a home you like.

2. Prepare to double your costs.
Unless you’ve recently come into money, you’ll likely be getting a second mortgage to pay for your new property. Combine that with the payments you’ll have to make on both your old and new house on a regular basis (council tax, maintenance fees, utility bills and insurance, for example), and you could be looking at a considerable increase in your monthly outgoings. Set a budget, and make sure you can afford a second home.

3. Check regional differences.
France, Spain, Cyprus, Italy and Bulgaria all have regionally-specific additional taxes and fees that need paying for people hoping to buy a home abroad. Do the research, and be sure to factor these in when you’re working out your costs.

4. Go during the off-season.
It’s all well and good thinking you want a home abroad when the weather is fine and the place is swarming with friendly faces, but trying going back at different times of the year. After all, one of the benefits of owning your own home abroad is being to go there during all seasons, so it’s a good idea to make sure you like the area all year round. What’s the use in having a house you can only enjoy for a few months of the year?

5. Decide how long you see yourself being there.
You don’t have to keep your holiday home forever. However, how long you plan on staying in one location may determine what kind of property you go for. If you plan on being there for more than twenty years, stamp duty, mortgage application fees, solicitors’ fees, valuation and surveyors’ costs will likely only be a small percentage of your total expenditure. If, on the other hand, you plan to hold the property for ten years or less, they’ll make up a much larger chunk. As a result, you might want to consider going for a newer property, rather than a fixer-upper, as you’ll likely have less money free to play around with after you pay the necessary fees.

6. Consider your exit.
On the off-chance you’re not blissfully happy with your new home, make sure there’s an easy way out. Check the reselling laws for your region of choice, and ensure that – should the worst come to the worst – you can resell without paying too much in the way of taxes.

Credit Card Introductory Offers

It’s not difficult to get confused by the massive number of potential introductory offers that are thrown about by credit card companies. How do you know which one is for you?

Here’s an explanation of six of the most common introductory offers, and how they work:

Low Balance Transfer Rates
It’s fairly common now to find introductory offers that include balance transfer rates much lower than the standard – often zero percent – for a period of six months or so. While this may sound like a great deal, it’s important to remember that this period will not last forever, and you may find that the standard rate is higher than it is for the card you’re currently holding; in short, it’s possible to lose money by making the switch if you get caught unawares. This can work out to a considerable saving if you plan on clearing your card debt during the introductory period, but may cost you more in the long run.

Low Interest Rates
As is the case with balance transfer rates, many institutions offer a period of lowered interest rates on new purchases in order to bring new customers in. This is usually for six months (although it’s possible to find cards that offer a longer introductory period), and can be as low as zero percent. Once again, however, it’s important to note that this is only a temporary offer, and the standard APR of the card after this period may be relatively high.

Cashback
If the credit card in question offers a cashback service, you’ll be reimbursed a small amount (usually 0.5-1%) on every transaction you make on it. While this might not sound like much, it can soon add up – and if you pay off your account fully every month anyway, it amounts to a small discount on everything you buy, as you wouldn’t be liable for any interest rates (due to the fact that there’s no remaining balance).

Positive Repayment Order
This doesn’t tend to be a common selling point, but is quickly becoming a popular choice for consumers. While many credit cards arrange your repayments so that they pay for the most recent purchases first, positive repayment ordered cards redirect the bulk of your payments to clearing the debt on your most expensive purchases. In theory, this helps to spread the wealth around, and thus clear your debt faster.

Purchase Protection
Some lenders offer insurance on items bought on the card for up to 90 days after purchase, which can be very useful should something go wrong with an expensive buy you don’t have a warranty for.

Fraud Protection
A lot of cards offer you protection against purchases made on your card, should they prove to be the result of identity theft. However, beware of cards that say you only have to pay the first £50 of any fraudulent usage in your name; they’re only giving you what you already have under the Consumer Credit Act anyway.

Remember: as useful as credit cards can be, they can also end up becoming a fast-track to financial difficulty if used irresponsibly or excessively. However, if you spend wisely (and make sure you both know and stick to your budget), you should be fine.

Online Current Accounts Explained

Given that we now live in a digital age in which a large number of people have access to the internet twenty-four hours a day, seven days a week, it should come as little surprise that online current accounts are rapidly increasing in popularity.

While some people decry the fact that it’s taking the human contact out of banking and it’s a step away from the old fashioned face-to-face values, that kind of nostalgia really has no place in today’s banking marketplace. When was the last time you had a pleasant chat with your bank manager? The odds are, it’s been a while. Using the latest technological advances allows you to streamline your financial transactions to suit the world you live in – no rushing to the bank before closing time, no being unable to access your funds during the night or on Sundays, and no dealing with irritable or poorly-trained bank tellers (a minority, but they’re certainly still out there). Online banking allows your money to work for you, not the other way around.

Setting up an online current account is, generally speaking, very simple. It usually involves going to the site of the banking institution in question, answering various questions about what you need from your account and personal details. Once that’s finished, it’s as easy as choosing a password and printing off a form to sign and send in – thanks to the fact that digital contracting is still in its infancy, you still need to have an actual pen-and-ink signature to make the whole thing official.

It all depends on what kind of service you’re after, of course, but it’s not at all unusual to find banks and other financial institutions that offer better deals for people who use internet banking services, including online current accounts. This usually comes in the form of higher interest rates on your savings, but banks are free to offer the same kind of incentive they do with any other kind of account, be it telephone or in-branch banking. Check to see what the terms are before you sign up, and make sure you’re getting a good deal.

Of course, one of the main advantages of an account like this is its functionality. Once you have the ability to move your money around at the click of a mouse, it’s easy to find the best deal possible, as well as to keep track of your income and expenditure over any given period. Additionally, up-to-the-minute electronic statements means that, should anyone be making unauthorised withdrawals from your account (as a result of, for example, identity theft), you can find out right away. For the computer literate, there’s really very little to lose by embracing the future of banking.

That doesn’t mean you shouldn’t still hunt around and make sure you’re getting the best deal, but for those in the know (and for those willing to learn), online current accounts can be an extremely simple way of saving both time and money – and in these financially-shaky times, who couldn’t use a little extra of both?

Protecting your health with health insurance

Choice is an important feature of medical care for many people, and sometimes taking out health insurance is the only way to get it. A policy can also give someone much quicker access to care, and do away with the long waiting lists associated with public treatment.

A policy can allow someone to even choose from a range of hospitals, meaning they can get treatment close to home or relatives. Protection can also be bought for whole families as opposed to an individual.

The type of policy someone goes for will be dependent on their age and the reason for wanting health insurance. A few people are lucky enough to get health insurance as part of their job and some employers run company medical insurance plans for their employees. The theory goes that not only is this a bonus for the worker, it may ensure they get back to work more quickly if they are ill.

There are a wide range of providers offering different levels of plan. Some allow you to choose varying levels of cover almost like selecting the standard of service at a car wash. Of course, the more you pay the more you are likely to get regular check-ups and a wider choice of hospitals.

When applying for cover insurers will not simply handout a policy straight away. Someone is normally required to fill out a detailed form providing their medical history, and listing any past conditions. Some firms even contact the applicant’s GP, with permission, to find out more and get confirmation.

Companies do not normally cover pre-existing conditions, so it is important to be honest when applying. If it can later be proved that you knew you were going to fall ill, you will not be protected and will be unable to claim.

Some firms allow you to list and highlight a number of past conditions. As opposed to refusing cover outright an insurance company may then list these as exclusions, meaning any new problems will be protected against.

One thing to look out for when comparing health cover providers are the way they bulk together family policies. For example, a married couple might be able to get cover which is cheaper overall than if they took out individual policies. Likewise a family of four involving a wife, husband and two children may again be able to get something cheaper than if they had separate policies.

When looking at different health insurance policies many people will notice that older people tend to pay more. This is due to them having a higher likelihood of suffering from health problems, and comparing a number of policies may help someone to find the cheapest. It may also be worth looking out for what choice you get when it comes to deciding on a hospital for treatment - are there half a dozen locations on the list, or 20? Regular check-ups may also be thrown in, and it is worth looking at just how often they occur and what they include.

Property investment mortgages

Property Investment mortgages can be used to buy one extra property or a number of different homes by way of an investment. Some people wait until the housing market flattens, and then use finance to buy a number of properties in the assumption that prices will go up in future and return them a profit. The most common kind of investment mortgage is the buy to let mortgage, which allows someone to purchase a home and rent it out, with the income used to pay off the mortgage.

Buy to let mortgages are available from high street lenders, although their availability may go up and down depending on the financial climate. The traditional expectations will be that you are able to rent out the property for a fee large enough to cover mortgage repayments, associated costs, and then leave you with a reasonable profit.

Even with the housing market suffering, buy to let mortgages remain popular because the slump in sales means more people are looking to rent rather than buy. This means there is a market at which to aim your rented property. Just as with other types of mortgages, lenders will carefully examine any application before approving a loan. Generally speaking a bank manager will expect to see you buy property which is expected to go up in value rather than down. The bank’s expectations of the property are not just designed to protect themselves as if you default on the loan, they suffer. Therefore it is in their interests to make sure you are taking on property investment mortgages which suit you.

Some providers will even ask that you do not market the house privately, but use a professional estate agent. This can even be part of the conditions of getting the loan. Other common conditions include that a landlord does not rent the house to someone who is receiving state support and does not have a job. This might seem extreme and even somewhat intrusive, but again is really only designed to ensure the risk of you falling behind with repayments is minimised. Someone who has a very low income may fall behind with the rent quite quickly, and no rent means less money to pay back the mortgage.

Note that a big deposit will normally be required for property investment mortgages, normally about a quarter of the value of the property. These mortgages are also different to traditional home loans in that they involve working out all the added extras. For example, owning a property which you rent carried responsibilities and you will be expected to pay out towards maintenance costs, you will also need a buildings insurance policy, and there are tax implications. Even if you are only buying a home to do it up and sell it on, you need to think carefully about how you intend to fund any improvements before putting it back on the market. As with other loans - you will have the usual options of fixed interest rates, capped interest rates, and variable rates, among others - the main thing could be to ensure you balance existing commitments with your new investment venture.

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