Life Insurance - Have I made a terrible Mistake

DayDreamSaver

I'm hoping someone can help. I have just taken out life insurance, and have a right to cancel the policy and don't know if I should.

We have just moved house, with a much bigger mortgage. If I die my partner could not afford the mortgage so I wanted life insurance. The same if I got ill - so we added critical illness. Our money is tight and my partner is a smoker so we do not have cover for him.

We got an excellent deal on our mortgage with an IFA. I did lots and lots of research myself and couldn't find us anything as good as he found us. He also got us a number of quotes for insurance and we just took out the cheapest without thinking. Its with Bright Gray.

However the premium seems quite high - about £45 a month. (i'm 30, non smoker) I started to think it was too high, but it has been made worse by the paper work we received today which says our IFA gets £1500 commission in year one, and then about £15 a year from year 3 onwards. It says this cost is already added to our payments.

I know they have to make their money, and I know he also got commission on our mortgage - in that case it was win win as far as I can see. But i seem to be paying an awful lot to him for insurance!

What does anyone else think? Am I kidding myself that we could get it cheaper (and therefore add my partner to the cover in case he dies. God Forbid)

I have looked on a couple of quote sites but they want all our details and I am reluctant to put these in given I have just taken this policy out - will it look odd? Show up on credit file?

Please help - and apologies for long post

DDS

consumer

The premium paid on policy depends on lot of factors. Critical illness cover does increase the premiums.

However, you can try to get quotes from other IFA and see whether the premiums are same for equivalent level of cover.

Getting quotations from insurance providers does not lead to credit search.

If you wish to do DIY, you can try to get quotes from www.cavendishonline.co.uk or moneyworld.co.uk as mentioned in Martin's life assurance guide.

lordhaldon

Based on what you have said, I would suggest that you need the life insurance! There are sites around and the fee based ones take your money up front. Yes it is only a fee but if you change your mind - they keep all or some of the fee. Your adviser by your own words did you a good deal. If anything happens to your hubby or you and the policy pays out, you won't mind your adviser getting £1500. I hope this helps. As for putting in your details, care is needed but if the padlock is in the address bar or the security certificate is from say Thawte you should be safe.

DayDreamSaver

Thanks both. I just started to worry as I saw adverts like 'Tesco life insurance from £5 a month' and thought I might be paying a lot lot more than I should.

I will look at martin's guide and the site you suggest and see what I find

DDS

Hooloovoo

DayDreamSaver wrote: »

However the premium seems quite high - about £45 a month. (i'm 30, non smoker) I started to think it was too high, but it has been made worse by the paper work we received today which says our IFA gets £1500 commission in year one, and then about £15 a year from year 3 onwards. It says this cost is already added to our payments.

There's got to be something wrong there. It doesn't make any sense.

If you're paying £45 per month that's an annual premium of £540.

If they pay the IFA £1500 in commission in year one, then they have to be sure you're going to hold the policy for at least three years before they even start to make any money from you. Doesn't sound very likely to me unless you also have say a five year fixed term lock in on the policy or something?

dunstonh

I know they have to make their money, and I know he also got commission on our mortgage - in that case it was win win as far as I can see. But i seem to be paying an awful lot to him for insurance!

Its not all going in his pocket. About 1/3rd of it goes on costs. Typically, mortgages pay little or nothing and if you didnt go fee based, the adviser uses the commission from the life policy to allow them to give fees free mortgage advice.

What does anyone else think? Am I kidding myself that we could get it cheaper (and therefore add my partner to the cover in case he dies. God Forbid)

You can get it cheaper. Its case of deciding whether you want to or not. You should also check the terms of business with your adviser. Your contract may have a fees free mortgage advice only if you purchase a life assurance which if you then cancel, you have to pay the fees.

I saw adverts like 'Tesco life insurance from £5 a month' and thought I might be paying a lot lot more than I should.

Most life assurances have low minimum premiums. Bright grey will be around £5-£10 pm. However, the sum assured will be lower as well.

If they pay the IFA £1500 in commission in year one, then they have to be sure you're going to hold the policy for at least three years before they even start to make any money from you. Doesn't sound very likely to me unless you also have say a five year fixed term lock in on the policy or something?

Bright Grey, like most others, will pay the amount up front if the adviser wants it that way but nothing on drip during the indemnity period. It is clawed back on cancellation during the indemnity period. Its a payment with retention for x years if premiums stop.