Laws and Life Insurance

The following Questions represent the legal aspects of Life Insurance we think you will be most interested in. The information is not definitive nor is it exhaustive but simply an introduction into the legalities involved.

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What is Life Insurance?
Life Insurance (with terminal cover included) is a form of insurance that pays out a lump sum if you die or fall terminally ill during the period covered by the policy.
What is Family Income Benefit Insurance?
Family Income Benefit Insurance will provide a monthly payment to the family until the end of the policy’s term, following the death of the policyholder.
Will I need a medical?
This depends upon your medical history and the exact plan you have chosen.
How is a claim made?
All claims are made against the Life Company who issued your policy. You will find details of the claims procedure within the policy documents they provide with your policy and in the key features document.
Complaints about a Life Insurance Adviser
All the Life Insurance Adviser aqre now regulated by the Financial Services Authority.

If you require additional information relating to the regulation of life insurance companies and brokers, we suggest you visit the Financial Services Authority’s (FSA) web site that is
www.fsa.gov.uk

Laws and life insurance

You must reside in the UK to take out a life insurance policy from a UK based Life company. This is not stipulated in UK law, but UK laws and tax regulations prevent a UK based Life Company from selling life insurance to anyone except a UK resident.

There are no laws in the UK that require a person to have or not to have a life insurance policy. Life insurance is an voluntary form of insurance protection within the UK.

You can buy life insurance from a UK based Life Company. As such your insurance provider is subject to all UK Corporate Laws. There are also a number of Laws that apply solely to insurance companies. These regulate the value of the risks they take on in relation to their financial reserves. These laws are designed to ensure that if you make a claim, your insurance company will be in a position to meet your claim.

The Data Protection Act 1998 is concerned with way organisations store, safeguard and use the data they have collected about people. This is particularly important within the insurance and life insurance industry as the companies involved accumulate huge amounts of information about you from details about you - from age and hobbies to the very sensitive area of medical information. One of the key provisions is that if a company wishes to pass your information to another company for marketing purposes, the company collecting the data must warn you and give you the opportunity of refusing your permission you’re your information to be used in this way.

All reputable web sites which collect information relating to the provision of life insurance will have a “Privacy Statement”. This “Privacy Statement” will tell you how they handle and distribute your information. To read our “Privacy Statement” please click here.

The main piece of legislation that affects the promotion and sale of financial products is the Financial Services and Markets Act (2000). This Act is highly detailed and complex but it is primarily concerned with the protection of the consumer and their rights. Its provisions center on financial products and services and the provision of financial advice.

The Financial Services and Markets Act (2000) aims to make sure people who provide financial advice are trustworthy, competent (which includes being well trained and supervised), and their advice is fully justifiable and that the advice is in the clients best interests . It also aims to make sure that the client is provided with full and accurate information about the products you have selected, or are being advised to buy. Both pre and post sale information should be provided.

The Act also closely regulates the companies that sell financial products and their Financial Advisers. Anybody who provides financial advice must be registered with the FSA.

The Act differentiates between where advice has been provided and where a financial product has been purchased through a Financial Adviser but where the customer was wholly responsible for the selection of the investment (The Financial adviser simply processes the purchase of the investment on the clients’ behalf and provided no advice at any stage during the purchase or choosing procedure). This situation is often referred to “execution only” business. In this situation the Advisers’ responsibilities are restricted to the efficient and accurate processing of the purchase. The financial advisor is not for the suitability of the product for the customers needs in this circumstance.

All customers buying through a Financial Adviser must, be informed in writing at the start of the Advisers’ Terms and Conditions of business. These will also include details of the complaints procedure.

If a customer has a complaint relating to the sale of a product regulated by the FSA , then the complaint has to be explained in writing and sent to the Company using the proceedure explianed in its Terms Of Business. The organisation is then responsible for investigating the complaint and providing a reasonable reply to the customer. If the Company agrees with the complaint and the customer has experienced a financial loss, then the organisation must agree to make an financial settlement to make good the mistake.

If the customer has suffered financial loss and cannot accept the conclusions of the organisation or their proposed financial settlement, then the case may be submitted to the Financial Ombudsman.. Their service if free and they are totally independent. Their findings are usually binding on both parties.

The other main form of protection for the customer is the Financial Services Compensation Scheme. This will provide the customer with a level of protection if a financial organisation becomes bankrupt or cannot properly meet its’ financial responsibilities to investors. Any remuneration is unlikely to be the full amount the client lost when the firm became bankrupt.