In the UK, there are no laws that say a person must have life insurance. It's completely up to you if you want to buy it. About 40% of the people who work in the UK have life insurance, either through their own policy or through a deal with their employer.
So let's start with the easy stuff. If you want to buy life insurance from a company based in the UK, you have to live there. This is not required by UK law, but UK laws and tax rules make it impossible for an insurance company based in the UK to sell insurance to anyone who is not a resident of the UK. But keep in mind that if you buy life insurance and then move abroad, your policy will no longer be valid. Obviously, invalidation doesn't apply when you're on vacation, but if you're going to be working abroad for a short time, you should tell your insurance company before you leave.
UK Corporate Laws apply to all insurance companies in the UK. But insurance companies have to follow rules that only they have to follow. These decide how much risk a company can take based on how much money it has on hand. These rules are meant to make sure that if you make a claim, your insurance company will be able to pay.
The Data Protection Act of 1998 is about how businesses in the UK store, protect, and use the information they get about people. This is especially important in the life insurance business, where companies keep a lot of personal information about you, like your age, health history, and way of life. One of the most important parts of the Data Protection Act says that if a business wants to give your information to another business for marketing purposes, the business that gets the information from you must tell you what it plans to do and give you the chance to say no. Also, all reputable websites that sell life insurance will have a "Privacy Statement" that tells you how they handle and use your information.
The Financial Services and Markets Act from 2000 is the most important law that affects how financial services, like life insurance, are sold in the UK. The Act is very complicated, but the main goal is to protect you, the customer. The Financial Services Authority is in charge of making sure that the Act is carried out (FSA). The FSA oversees all ways that financial products and services are advertised in the UK. This includes the work of financial and mortgage advisors. Their goal is to make sure that you get clear, professional advice that fits your needs. They also make sure you have a way to get paid if it turns out you got bad or insufficient advice.
For the average person, the FSA has the most impact on the advisors they talk to. The FSA wants to make sure that all financial advisors are reliable and knowledgeable. This means that they are well supervised and trained, and that any advice they give is in your best interest. The FSA also makes sure that you get full and accurate information about products before and after you buy them. They also keep a close eye on the companies that make the financial products.
In fact, the Financial Services Authority must approve everyone and every organisation that gives financial advice in the UK.
But the Act makes a difference between "Execution Only" business and financial products bought because a Financial Adviser said they were a good idea. Execution Only means that the customer is in charge of choosing the investment, and the financial advisers' only job is to make sure the purchase goes through smoothly. Under Execution Only, the Adviser is not responsible for making sure that the product meets the needs of the client.
You should know that many sites that sell life insurance work on this Execution Only basis. But most web site owners give a lot of information so that the customer can make an informed decision. The information is sometimes posted on a website, and other times it is given during a follow-up phone call. In either case, the website's Terms of Business must explain how they provide financial services, and as part of your application, you will usually have to confirm that you have read these Terms.
These Terms of Business will always have information about how to file a complaint. If a customer wants to make a complaint, they must put it in writing and send it to the Compliance Officer at the company that hired the advisor. The business must then look into the complaint and write back to the customer. If the Compliance Officer agrees with the customer and the customer has lost money because of it, the business must come to an agreement with the customer about a financial settlement. In the end, if the customer has lost money and doesn't agree with either the organisations' conclusions or their proposed financial settlement, the situation can be brought to the attention of the Financial Ombudsman. The customer doesn't have to pay for the Financial Ombudsman's services, and they are completely independent. Usually, both sides have to follow the Financial Ombudsman's decision.
The Financial Services Compensation Scheme is another important way to protect the customer. This gives the customer some protection in case an FSA-regulated financial organisation goes bankrupt and can't meet its financial obligations to its clients.
Postscript
We think you will find the above information about the law to be the most helpful. The information is neither final nor complete; it is just an introduction for people who don't know much about the subject.
Visit the Financial Services Authority's website at www.fsa.gov.uk for more information about how life insurance companies, insurance brokers, and financial advisers are regulated.
