Independent Financial Advisers and Pension Consultants

GETTING CHEAPER ALL THE TIME

Price rises are a fact of life. Even though inflation is much lower than it was in the 1980s, it is rare indeed for prices to fall over the medium term. For example, between January 1987 and January 2001, average prices, as measured by the Retail Prices Index, rose by just over 71% *.Some items rose much faster, such as beer and petrol, although a loaf of bread is now cheaper in real terms. There is one vital service that is now much cheaper than it was in 1987. According to one of the leading reinsurance companies, pure life assurance cover is up to 40% cheaper than it was 14 years ago for a person of the same age.** There are two main reasons for this: On average, we are all living longer, which means that the chances of dying early are less. In 1987 most life companies were worried about AIDS and loaded their rates accordingly. Although AIDS has not disappeared, it is no longer a major concern to the actuaries who calculate premium rates. The life assurance market has become much more competitive. Technology has made it much easier to compare individual costs and companies have had to cut their margins or lose business. The downward move has been most obvious in the cost of life cover, but critical illness cover premiums have also been cut. If you have cover that was arranged more than a year ago, it makes sense to check whether you can now replace it at a lower cost, or increase your level of cover for little or no additional outlay. As independent financial advisers, we are not tied to one insurance company and can therefore find you the most suitable terms available in the market. * Source: National Statistics (2001) ** Source: Munich Re (2001)

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