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Debt restructuring before insurance cancellation
3 November, 2008
According to TCF Debt Solutions’ Managing Director, Andy Moody, vital life assurance and other insurance policies would be saved by intermediaries for their clients if they felt more confident to recommend a debt solution for those in financial difficulties.
With research from uSwitch showing that 42% of UK citizens are cutting back on some sort of insurance to save money, Andy Moody believes that by helping clients to set a realistic budget and by recommending more radical debt solutions for those in worse financial difficulties, advisers can make sure that valuable life cover and other insurances were not cancelled.
“There are tremendous implications for intermediaries in this market. Reducing renewal commission and the threat of clawback are just the impact that intermediaries can do without and the decision by customers to stop paying for vital insurance policies could be catastrophic for them. The decision to economise is sound but families facing financial hardship need to look at priorities and need help to identify priorities and before taking the axe to insurance premiums, the whole budget needs to be looked at with particular reference to reducing payment on debt.”
He added “For many people, they are stuck trying to repay loans, credit cards and mortgages in a market where debt consolidation is getting harder and harder. As part of any client review, intermediaries have a duty to ensure that real saving can be prioritised and in a lot of cases in order to get the family budget balanced, it is far better to make sure that all options have been exhausted. A payment scheme to repay debt in a structured and controlled manner which reduces monthly payments has got to be better than cancelling valuable protection and general insurance in a vain attempt to reduce costs.