Is ASDA pocketing the difference from your life insurance?
We have known for ages that many of our biggest supermarket chains do a line in financial products as well, with savings accounts, home and car insurance now commonplace at the checkout. However, although these products can be a consumer find, it doesn’t necessarily follow that a value supermarket is going to provide the best value in insurance, for example. In particular, a comparison site with a vested interest in finding poor deals claims ASDA's new 'guaranteed' life assurance policy could mean customers are paying too high a price for lower levels of cover.
In a hilarious play on words, Michael Ward, founder of payingtoomuch.com who have released the findings, says: "It is likely that more than 3 out of 4 customers would be able to get over double the amount of cover ASDA is trying to persuade them to take out for the same price. This doesn't sound like saving you money everyday to us!"
The comparison site claims that not only is the ASDA policy nearly double the standard rate, it won't pay out if you die from a heart condition, cancer, stroke or terminal illness if it can prove you knew you had the condition when the policy was taken out.
And the clue to why the policy shouldn’t necessarily be in your basket is in the name. A guaranteed insurance policy generally means that everyone is accepted on to the policy, no matter what their health history. Customers don't have to answer lots of health questions before they are given cover, and the whole process is quick and easy. But there is a price.
People who are either healthy or have existing health problems, such as high blood pressure that could invalidate a claim, would be better off in terms of cost and cover with an underwritten product. Although this will involve time, and probably access to your medical records, in the long-run it is not only likely to be cheaper, it will be easier to claim if you need to.
Insurance is a game of risk, and if a policy is underwritten, the insurer knows everything about you and can work out what the chances of you dying during the policy term are. Because they know the risks, they can work out an appropriate premium to cover their risk. In a guaranteed policy, they know nothing about you, and while you could be the healthiest person alive, you could also have a family history of people dying young from terminal illness, so they will bump up the premium to cover the risk of you being one of those sorts of people.
So it’s up to you- but we do like to save you money and a £10 monthly reduction in premium over a 15 year term of life insurance would save you £1,800 for the cost of a few more questions up front- after all Every Little Helps. No, wait...