What are the laws and regulations regarding life assurance in the United Kingdom?

Life insurance is not the same as car insurance in that it is not compulsory for anyone to take out. It is similar though in that it covers you should a fortuitous event occur that would bring financial penury upon yourself, with the added factor that it covers your dependents in this instance as well. Life insurance is one of the purest forms of insurance, in that ideally, you really would not want to have to claim, as to claim means that something bad has happened. Because it is not compulsory, the answer to a question about laws and regulations should be directed more at how they protect you as a consumer.

On purchasing insurance, you will be protected by the Financial Services and Markets Act (2000), which sets out various regulations. This act concentrates a great deal on the precautions that you should take to protect yourself before you buy life insurance. You should remember that it is very easy to buy inappropriate products in the life insurance market, it is even more important that you make sure that you are paying premiums for a product that you need. Financial advisers and brokers make a lot of money out of commission from life insurance products, which is why you need to be protected to make sure you are being sold the policy that’s in your adviser’s interests more than yours.

The FSMA sets out laws that govern how investment firms need to be trustworthy and honest when they deal with clients, ensuring that they provide adequate information and competent advice to their clients. You as a consumer have a right to be provided with accurate and full information about products not just before you buy, but also after you buy them.

The Financial Services Authority provides a means by which you can check whether an adviser or salesperson is properly qualified to give you the advice they are offering. Their website enables you to check out an advice firm as well to discover if they will be regulated by the FSA. Investment business cannot be carried out by a company without a licence and to get a licence they need to meet and adhere to certain criteria in their everyday business. The FSA’s website will also give you a contact name in the regulated firm should you have a complaint or an enquiry.

Should you buy a product on an execution-only basis, then you may forfeit some consumer rights. Execution-only can be cheaper and more convenient, but you do have a right to advice if you want it.

Finally, the Financial Services Compensation Scheme will protect you should a firm go bankrupt and cannot pay you money owed to you.

 

 

 

 

 

 

 

 

 

 

© AskFinancially.com 2008

Life Insurance

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