Insurance Risks

Insurance Risks - Investments 2 2

Insurance Risks

There are certain risks associated with insurance contracts. We point out some of the major risks below which we would urge you to consider seriously before committing yourself to an insurance contract.

  • If for any reason you cease contributions, the cover will lapse.
  • The advice provided to you is based upon the information you have disclosed, and you will be given copies of all declarations made, before the policy being put into force (or at least shortly after) to ascertain that the information is correct. Please check the information carefully and ensure that you make us aware if any alterations are required.
  • Failure to correctly disclose any adverse medical or other information requested by underwriters to an insurance contract may void your policy.
  • Life Insurance benefits will usually be added to the value of your estate unless they are written under a trust. Please ensure you discuss with your adviser whether your policy should be placed under trust at outset or not.
  • Insurance policies can have a level or reducing sum assured, premiums may be level or increasing, premiums may also be guaranteed or reviewable. Please ensure that you discuss with your adviser the effect that these variances may have on affordability and value over the longer term.

Financial Services Compensation Scheme ('FSCS')

The FSCS was set up under the Financial Services and Markets Act 2000 and exists to protect clients of FSA-authorised firms. It covers Mortgage advising and arranging up to £85,000. The Scheme can pay compensation to clients who have lost money as a result of their dealings with FCA authorised firms that are unable to pay claims against them, usually because they are insolvent or have stopped trading.

Buy-to-let mortgages and non-regulated contracts may not be covered under the FSCS scheme or by the Financial Ombudsman Service (FOS). Therefore, is is important that you understand and are aware if your investment is a ‘regulated contract’ or a ‘non-regulated’ contract.

Insurance Risks - Investments 3 1