With much talk about payment holidays or reduced premiums for insurance customers during the COVID-19 outbreak, a lot of us have been left confused over our cover. In this article I’ll explain a little about what these changes mean for some of your insurance policies, and what help insurance companies are going to offer you in the way of help. So read in on about Insurance Payment Holidays.
The Financial Conduct Authority (FCA) who regulate the insurance industry brought in new measures on May 18th of this year to support insurance customers who are struggling due to the coronavirus pandemic.
These measures cover all types of protection insurance including income protection, critical illness cover, and life insurance, and means that if you were to contact your insurance provider they must now help you by considering the following options:
● Reassessing the risk of providing you with the insurance, and if the risk of you now claiming is lower, lower the premiums.
● If you have ‘add on’ cover or other benefits on top of your premium they should look at whether you still need it, and if not remove them and reduce your premiums.
● Waive any admin fees if you want to change your level of cover, and cancellation fees if your wish to cancel your policy.
● Offer a payment holiday of up to 3 months if you are still struggling to pay your premiums even after they have been reassessed. Do note that interest WILL be charged on your premiums during the payment break.
Under these new measures, insurance companies now have to consider what options they can give to their customers to help them during the pandemic:
Let’s look at these options in more detail:
What Help Is Available For Insurance Customers?
● Checking your level of cover – If you contact your insurance company they will check that the level of cover you have now is still suitable. Let’s say for example that your life insurance premiums have taken into account the machinery you often work with as part of your job, but now you have been given an admin role in order to work from home. Your insurer might look at lowering your premiums so you can still benefit from
being covered, while saving a bit of money!
● Any ‘Extras’ Need To Be Reassessed – Most insurance policies allow you to add on extras when you take them out – whether that be cover for your children on your life insurance, or cash bonuses for nights spent in NHS hospitals on your private health insurance. Again, your insurance company will be able to tell you if any paid add-ons are still worth having at the moment, and may remove them and lower your premiums if they’re not.
So, what happens if your policy is reassessed and your insurer decides your monthly payments SHOULD be reduced?
Well, those paying in monthly instalments should have those payments reduced, and those who have paid for their cover upfront should receive a partial refund.
And how about if you want to cancel or adjust your policy?
In that case any fees normally charged by insurers for you to do this should be waived, and, if you decide to return to the same insurer after all of this you should be able to do so without being penalised.
What About If I’m Still Struggling After The Reassessments?
If making payments is still going to be a struggle at the moment, even after the insurers have lowered your premiums then companies should offer you a Insurance Payment Holidays on your policy.
This will typically be between 1 and 3 months, but they can offer longer breaks at their discretion if they feel it’s in the customer’s best interest.
Speaking of interest, it’s worth remembering that if you take a payment break interest will still accrue on your policy.
And how long do you have to request a payment holiday on your insurance policy? – fortunately up until the 18th August 2020.
Is Everyone Eligible For This Help?
As with all measures that have been brought in when it comes to anything financial, only customers who are struggling due to the coronavirus pandemic are eligible.
However, if you are having financial problems for other reasons there may be help offered under a different set of rules, so it’s still worth getting in touch with your insurer and finding out what they can do to help.
It’s important to know that your insurer will not automatically offer you a payment holiday – it is down to you to contact them directly to ask for help, and they will reassess your cover in an attempt to lower your premiums first.
If you ask for a payment holiday your insurance company won’t be expected to look into why, but they can still refuse you one if they don’t feel it’s in your best interest. Another reason they might refuse a payment holiday is if you are coming to the end of your policy, and taking the break means you would be tied into your policy past your renewal date.
And so, in short, there are options open to insurance customers during this time; it’s just simply a case of contacting your provider and finding out what! Even if a payment break doesn’t actually turn out to be in your best interest, with the offers of lower premiums and fee waivers, something will be – insurers want to keep their customers after all! So get in touch now and see what help is available to you.