Insurers are duping customers into wasting thousands of pounds on ‘useless, expensive’ policies, campaigners warned last night.

Consumer group Which? said some cover is vital, for buildings, house contents, life and cars.

But it said other policies were often unnecessary, were hard to claim on and rarely paid out.

Although they offered ‘peace of mind’, much of what they covered was already protected in law or by other policies.

Even though some policies offer cover against identity theft, any proven identity fraud losses would be paid by people’s banks.

Policies covering accidental death and injury may be covered under standard life insurance, while mobile phones are often included in home contents cover.

Tony Levene, of Which?, said: ‘You can buy insurance against almost any risk, even alien abduction. People should carry out a risk assessment of their own to make an informed choice.’

Many of us consider Critical Illness Insurance and disability insurance as something that would be a good thing to have but when we are fit and healthy, cannot see the point of making a financial allowance for it in our monthly budgets. Although we are happy to sit with our cup of coffee and a pastry costing each day and somehow rationalise that it is a necessity, but not spend the few pounds a week it would cost for Critical Illness insurance to protect our finances and our loved ones health, should we ever need to.

Most Critical Illness Insurance plans now cater for many of the more common illnesses and because statistics show that there is a good chance you will suffer one of these at some stage in your life, it is a worthwhile policy to have. The number of men who, before they retire, will suffer from a Critical Illness is an astonishing twenty percent according to statistics published from recent research. For women, this figure is slightly lower with only one in six being affected by a Critical Illness before retirement. Lack of knowledge or belief in the chances of contracting a Critical Illness might be the main reason why so few adults take out Critical Illness insurance protection, according to insurance companies. Although Critical Illness Insurance is taken out for many reasons, the majority of people use it to protect their mortgage repayments. Fortunately, most mortgage protection policies will now allow you to include Life Insurance and Critical Illness Cover.

One in four UK adults without a life insurance policy believe the cover is too expensive, research by AXA suggests.

One in five didn’t believe they needed it, while just over one in ten said they had never thought about it.

However, the research also suggests UK adults are more likely to have life insurance than their European counterparts.

The study found around 71% of UK adults now have at least one life insurance policy compared with 45% in Italy and 53% in Germany and Spain.

But AXA says few UK adults are adequately covered with just 20% having income protection to tide them through periods of sickness or unemployment, despite worsening economic conditions.

Graham Harvey, AXA managing director of protection, says: “While it is encouraging to see the majority of UK adults now have a life insurance policy, the reality is many people are still underinsured in key areas, particularly in the event of unemployment.

“It is particularly worrying to see how many people say they think protection insurance is either too expensive or that they don’t need it and this underlines the educational job that is still required to ensure more UK adults view adequate protection as a key part of their long term financial planning.

“With the housing market slowing, the trigger of buying a home will further decrease; this further highlights the need for individuals to seek independent financial advice for their protection needs.”

Of course, if you don’t have the time or inclination to visit an IFA, why don’t you use our calculator to assess your protection shortfalls. 

Protection provider progress from Royal Liver has launched a new section of its website designed to help existing customers and their advisers with answers to the most common non-underwriting protection queries.

The site offers information on what to do and who to contact in the event of a claim as well as details about progress’s products and FAQs.

It follows the launch in October last year of the firm’s Virtual Underwriter, which concerned application and underwriting queries.

Helen Southgate, IFA marketing consultant at Royal Liver, says: “The aim of the new customer website is to provide customers and their advisers with practical information, using a modern alternative to picking up the phone.

“It also shows that we remain committed to treating customers fairly in an online world where the internet may be a more preferable choice for some of our customers.”

Policyholders can email the progress team if their particular query is different to the contents of the site, so that new questions and answers can be added to the site in order to improve its effectiveness. In addition, the firm’s telephone helpdesk is still available.

 Rob Simpson, Managing Director of Simpson Financial Services, says ” I like the idea.  it seems better than the usual method of contacting an insurance company by phone and then spending 30 minutes trying t find the person dealing with your claim.” 

A distribution agreement that will see Nationwide Building Society sell Legal & General (L&G) protection, investment and pension products came into force today.

In return, L&G has bought Nationwide Life and Nationwide Unit Trust Managers for a total of £293m, a deal financed out of the £600m L&G raised through its Tier One capital issued in May last year.

Tim Breedon, group chief executive at L&G, says: “The strategic distribution agreement has the potential to become one of our largest.

“[We] will continue to develop and expand distribution in 2008, through banks and building societies, IFAs, platforms and direct to market.

“Each channel is strategically important to us and we see opportunities in each to grow market share.”

Graham Beale, Nationwide chief executive, adds: “This agreement enables Nationwide to focus on what it does best – distributing financial services products which are simple, accessible and straightforward for its 13 million members.

“In line with our policy of offering the best products from the leading providers in the market, we are now able to offer members a broader range of products to meet their protection and investment needs.

“For the first time an ethical trust will be available – an exciting new addition to a range of investment trusts, as well as innovative new policies like the family life insurance plan to protect families.”

Nationwide Building Society will offer unit trusts and ISAs investing in a range of L&G funds including the ethical trust, as well as offer other products such as family life insurance plan, capital guaranteed multi-index equity bond, critical illness cover and life cover.

However, we at www.howmuchcover.co.uk are confident that our Legal & General premiums will be cheaper than Nationwide’s due to the way we take less commission.

Almost a quarter of people do not know how they would cope if they lost their regular income, according to research by the ABI.

The research, conducted for the first time, shows 2.4m people in the UK have long-term illnesses and claim incapacity benefit.

It also shows 23% will have no job at some point during their working life and one in three will not work for a year or more.

However, many are unsure how they would survive if their income was taken away, prompting the ABI to produce a fact sheet highlighting the different types of protection products available.

Nick Starling, the director of general insurance and health at the ABI, says: “It is important when people are taking out a loan or a mortgage that they think about how they would meet repayments should they fall ill or become unemployed.  Insurance can play a role in helping people meet their financial obligations in these circumstances.”

The protection industry is already moving to make it easier for people to receive money when they make a claim. Last month Friends Provident relaxed evidence requirements on claims for life cover, life cover with critical illness and standalone critical illness cover as part of a raft of changes to its underwriting processes.

Also in January, insurance companies agreed to pay more claims where customers have unintentionally not disclosed medical information, following ABI guidance.

You should check your employers Terms and Conditions of Employment and see what sick pay you would get.  It might be none.  For the Self Employed the situation could be the same.  Use our calculator and see how much cover you need and then find out which insurers will charge what for the cover.

Friends Provident has made its first foray into the business protection arena with the launch of the Business Protection Plan. It says the plan, conceived as a result of the firm’s strategic review, is for businesses looking to provide cover for partnership and shareholder protection, key person protection and loan protection.

Cover available under the plan includes level and decreasing life cover, with or without critical illness cover.

Friends says the product will appeal because of the speed of its underwriting and its dedicated case handlers.

Key benefits of the plan include free accidental death cover of up to £250,000 and interim life cover available up to £2m.

Mark Jones, head of protection marketing at Friends Provident, says business protection is an underused concept for both firms and advisers.

“There are around four and a half million businesses in the UK and Swiss Re estimates the business protection gap is approximately £500bn.”

Our staff at Howmuchcover are specialists in this area and are happy to discuss you business insurance requirements in more detail. Phone us for free on 0800 6342111 for details of hw we can help.