Life insurance quotes cheaper than our IFA's?

Beckyy

Our IFA has 'reassessed' my OH's and my current life insurance policies, as we are in the process of moving and have taken out a new mortgage.

He has found us new policies, and the monthly premiums are lower by £1-2 a month each. He's applied for these poicies for us, and we've recieved all the paperwork.

Just before sending the paperwork back confirming. I've just had a quick look online, only using moneysupermarket so far, and found quotes for exactly the same policies for slightly cheaper (£1-2 per month again) than our IFA's new policies. One of the quotes for my OH is for the same company as his new applicaion, just slightly over £1 per month cheaper.

The cover is for life & critical illness over 25yrs, paying out £100,000 fixed amount.

Is this just down to whichever system that our IFA used, or should he not have found these cheaper quotes?

ACG

Online systems such as money supermarket do not take commission. They get paid a smaller fee instead - so they get lower rates than going through an advised sale. We as advisors can never compete on price alone.

The difference is you advisor does research and has to back up his research with evidence its the best for you. Money supermarket, you are placing an order - if it turns out to be incorrect then you have no recourse (you cant complain about miss selling, you have no back up from the FOS or FSCS if you do it through a non advised route).

Beckyy

Thank you ACG. I've just have a nosey through the key facts for the policies on Moneysupermarket and found:

'For arranging this plan, MONEYSUPERMARKET.COM FIN GROUP LTD will earn an initial amount and a monthly amount from the 49th month until the end of the term. The yearly amounts are shown below.
Year Commission payable
1 £214.13
2 £0.00
3 £0.00
4 £0.00
5 onwards £3.48'

I can see our IFA has done the best he can for us with his quotes, but I'm considering taking out the policies through MS instead. We're both still young, and I hope that we never need to claim on our life insurance, so to be paying an extra £1/2 every month each for exactly the same cover would mean well over £1000 extra between us over the 25 years if we never changed again.

We didn't actually recieve Key Fact sheets from our IFA for these policies so I haven't a clue what he would gain regarding comission/fees. We paid a one off fee for his work overall on our move.

Quentin

Don't forget ACG is another broker, with a vested interest in keeping you with the commission earner broker route.

But as far as level term assurance is concerned, the MSE advice is "the best is the cheapest"!!

Some brokers will have deals where they give up (in return for a fixed fee), or share their commission, so try them before buying online, as they can be cheaper.

See the MSE guide:

http://www.moneysavingexpert.com/insurance/level-term-insurance

ACG

Whats my vested interest? Someone else earns money out of it? That doesnt benefit me in the slightest. I understand money is tight at the minute so £1-2 a month doesnt sound like a lot but if you manage to make cut backs here and there then it can all add up.

Im explaining the benefits of using an advisor over going through an online system, the OP can then make an informed decision, its not my job to try and ensure another advisor doesnt lose a policy and commission...thats their job. Im here to help people on this forum.

To the OP, i didnt think MSM would receive that much commission so youve taght me somethin new, i suspect it will still be lower than the advisor will receive. Your advisor might be prepared to lower his commission to match MSM...that way you get the best of both worlds, an advised sale at the lower rate?

Also dont forget, your needs will change over time...everyones does. Marriage, Divorce, Kids, new home etc. A good advisor will be in contact every step of the way and ensure you are adequately protected (whether that means reducing cover and losing commission or earning more money out of it, he/she shouldnt just be there for the good times).

Beckyy

Thanks Quentin. I was actually in two minds about whether to bother with it at all, as we're quite stable financially and don't have any children (yet). OH thinks it's a good idea though, and I suppose it's the wise thing to do with a new mortgage about to be looming over us for a few years to come. Thank you for the link. I've actually just had a look on Cavendish (linked off the MSE page) and I've actually got policies coming in even cheaper still.

I think I'll have a chat with our advisor and see if we can sort out the best route for us to go

ACG: Should our advisor have given us keyfact sheets showing the amount of commission he'll earn?

ACG

Oh, also if you have the quote off one of the pages...usually the back one will have what their commission is so you can compare.

Quentin

ACG wrote: »

Whats my vested interest?....

You being a broker suggesting there is some advantage (should anything go wrong) by using a broker instead of getting it cheaper online.

But there is no advantage with a level term assurance policy, so we should get it as cheap as we can, from wherever. (And many brokers would happily share commission to keep the sale!)

We are protected should the insurer go bust, which is all that matters with level term assurance, though you failed to mention that when scaremongering about "no recourse" about being missold etc!

ACG

Wheres my vested interest though?
Personally dont recommend on price alone....which surprisingly doesnt mean i always get more commission. There are insurers out there who include extra add ons for what can be 50p-£1 more than the cheapest quote and those extras can be worth worth every penny.

I actually come back with a response that means the OP may be able to get an advised sale which is always going to be better than a non advised sale.
I used to work for a life office, we had a complaint come in whereby a client had a critical illness, but the advisor never recommended or even mentioned CI to them. They made a complaint and guess what, they received a large payout (for the amount of their life insurance minus the difference in what the premiums would have been).

Obviously there was a little more to it but would they have received that on a non advised sale? no.

Thats only 1 example that im aware of and was involved in on the insurers side. So i still stand by words.

vaio

Beckyy wrote: »

Our IFA has 'reassessed' my OH's and my current life insurance policies, as we are in the process of moving and have taken out a new mortgage.

He has found us new policies, and the monthly premiums are lower by £1-2 a month each. He's applied for these poicies for us, and we've recieved all the paperwork.......

If the IFA has done all that work aren't you obliged to pay him?

Legally or morally?

Beckyy

I see your point vaio, but we never at any point asked him to reassess them - he done it on his own accord. We only went to him to find us a mortgage.

We paid him an outright feee of £150 for his services with our new mortgage (that included any insurances we wish to take out anyway). We have already paid that, and taken out our mortgage through him, so I don't feel that we are at all obligated to take out new life insurance through him just so that he can recieve his comission for spending a few minutes running our details through a system, especially when we had no intentions of changing it (I was infact considering cancelling it outright, and am still unsure about whether to continue with it).