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Life insurance. Look after your policy documents

Author: Emma Mayo

It looks like some life insurance policies are forever - because

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people have been forgetting to tell their next of kin just exactly what they did with their policy documents. It's not that quite simple, there are many reasons why a life insurance policy may sit unclaimed - but as a result it is estimated that at least £2 billion in life insurance claims have been left unclaimed. Surely that's more than careless!

There are a myriad of reasons why life insurance policies get forgotten:

People forget that they took them out in the first place.
People often don't leave a Will; as a result relatives have no evidence to show there was a policy, unless they come across some paperwork.
One in 16 people move house and forget to inform financial companies that they have moved, and lose touch completely.

It can get even more complicated. There were a lot of life assurance policies sold in the later half of the 20 th Century which doubled as savings vehicles, and were very popular at the time. As times have changed and companies have been bought by larger companies, they have disappeared off the radar, but the money will still be there - waiting to be claimed one day.

If you have a life policy and the company no longer exists, the Internet is the best place to look. Search on the company name in Google then you should be able to get some information relating to the company that now owns the policy. If that fails, then try the Association of Friendly Societies on 020 7216 7436 ( www.afs.org.uk ) - a trade body that has old records relating to friendlies and mutuals from the past.

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Did you Know?
If you smoke, the cost of your life insurance will be about double. And it's no use just giving it up a few weeks or months before you apply. Most life assurance companies say you mustn't have smoked for a least 12 months prior to the application – and some insurers extend this to 5 years!

Did you Know?
The words term assurance are used by many people when what they really want is term insurance, more commonly known as life insurance.

There is no investment element within life insurance and so there's no payout if the policy reaches its termination date. A life insurance policy only pays out if the policyholder were to die (or become terminally ill and death is anticipated within 12 months of diagnosis – other conditions may apply), before the policy's termination date.

Did you Know?
When looking for low mortgage rates you're sure to face the decision between choosing a cheap rate or a higher rate mortgage but which has very low, or no up front costs.

Everyone has seen mortgages advertised with incredibly low interest rates on both the Internet and in the national press. Experience has shown the mortgage lenders that it's a low headline interest rate that pulls in the borrowers. The problem is that these ultra low rates force them to replenish their profits in other ways. A common solution is high arrangement fee.

Arrangement fee are charged to supposedly cover the cost of managing the mortgage application and reserving the advance. These fees can normally be rolled in with the mortgage advance but some lenders require them to be paid in up front. And the fees do vary enormously, not only between lenders but even between mortgage products marketed by the same lender. So keep your eyes skinned!