The global financial recession has negatively impacted our feelings of trust in financial institutions. Now, more than ever, we want to know that we are getting our money’s worth and that our investments are safe. So who is watching over the insurance underwriters to ensure that consumers aren’t taken for a ride.
Purchasing life cover is a wise choice to protect your family financially. If you are protecting your family in the event of your death, however, who is protecting your arrangement with an insurance company?
Insurance providers will be authorised and regulated by the Financial Services Authority (FSA) and are covered by the Financial Services Compensation Scheme (FSCS). This means that if your insurance provider becomes insolvent or ceases trading and can no longer meet the claims against it, you may be entitled to compensation through the FSCS..
The FSCS is an independent governing body set up under the Financial Services and Markets Act 2000, to protect the consumer. They do not charge individual consumers for using their services and provide compensation for customers whose insurance provider can’t pay a claim against them.
The FSCS’s first responsibility, however, is to seek continuity of cover rather than to pay compensation. As a result, if your provider becomes insolvent you may find that your provider changes whilst your cover stays the same. Essentially your life cover insurance is there to protect you and your family in case of death and that continuity of cover should always be the first priority.
If your insurance provider does run into financial difficulties you will usually be notified by letter and will receive details of how this will affect you. You can always contact the FSA or FSCS if you have any questions and they will be happy to help.
Investing in life insurance will protect your family financially in case of your death. Thankfully there is also a body that is set up to protect you financially in case your provider no longer can.
About the Author
Offering a range of financial, travel and leisure services Greenbee is selected by the John Lewis Partnership. These include pet insurance, home, travel, wedding, event and car insurance products, life cover along with travel offers and the latest theatre, event, music and sport tickets.