Changing Life ins. policy - fee due to Advisor?

stevieboy_438

We have a life insurance policy with Legal and General which was arranged through a mortgage advisor. I have always suspected that we are paying over the odds for this cover and I have quotes for over 50% cheaper.

I therefore wish to cancel the L&G policy however I'm not sure if this will be simple as L&G paid some commision to the mortgage advisor. The key features says the following:
'The cost of providing advice which includes paying your advisor and providing supporting service in respect of this plan is approximately £1716.23 immediately, and then from month 49 £1.43 each month unitl the end of the plan.

'The amount will depend on the size of your premium and the length of the term of the contract. It will be paid for out of the premiums.'

So will I be able to cancel bearing in mind this arrangement, and if I can cancel will I be liable for any outstanding fees?
I do know that the mortgage advisor who sold me the policy does not work for the same mortgage brokers anymore if that helps.

Thanks in advance.

MarkyMarkD

In most cases your adviser won't have reserved any claw-back rights against you if it's just a standard advice arrangement.

But a number of money-back advisers will claw back money they've paid to you if you in turn do not keep the policy going.

£1716.23 sounds like an awful lot of commission for a life insurance policy. Are you sure that you are comparing like with like when you say you can get the same cover 50% cheaper?

dunstonh

L&G whole of market protection is often quite good value and I suspect if you are seeing a 50% drop in price, then you are not comparing like for like.

If you have an L&G policy arranged through a bank then it is possible that a 50% drop could occur although I wouldn't have thought it would have been that much. L&G tied agents are more expensive but I would have said more around the 30% mark.

stevieboy_438

I've done a quick comparison with a Tesco life quote.

At the moment I'm paying nearly £60 per month for us (couple M30, F27 non smoker and no adverse medical history) for a level term policy with critical illness. Tesco has come back with £18 without the critical illness which I don't consider to be worth the £40 odd gap, but I'm thinking about going for an income protection instead, plus I'm undecided about level term or mortgage cover (was woth about £5 a month on tesco quote. Still to be decided but I will get some proper quotes once I'm quite sure I can make a saving.

Anyway the first step is to know if I can get out of the L&G policy with no fees.

MarkyMarkD

Critical illness cover is significantly more expensive than life cover, so as predicted by dunstonh and myself you are not comparing like with like.

One has to ask why you bought a policy with critical illness cover in the first place if you don't think it worth the extra money involved.

stevieboy_438

What I meant was I can't see that the critical illness cover would account for 2/3 of the monthly premium.

Anyhow I'm reviewing my finances including a reassesment of cost to cover. In an ideal world most would like to have critical illness cover but circumstances and financial priorities change. Like I said I would prefer some kind of income protection insurance instead of critical illness.

jonesMUFCforever

stevieboy_438 wrote: »

What I meant was I can't see that the critical illness cover would account for 2/3 of the monthly premium.

Anyhow I'm reviewing my finances including a reassesment of cost to cover. In an ideal world most would like to have critical illness cover but circumstances and financial priorities change. Like I said I would prefer some kind of income protection insurance instead of critical illness.

I can!
Life policies are dirt cheap if you are young and healthy.
Income protection and critical illness cover are not cheap.

stevieboy_438

Ok, I will asses my need for CI/Income protection and the cost through a broker.

But the first step was determining if I can change from the current policy.

Thanks for the help.

jonesMUFCforever

Yes you can change.
Just make sure that you are on risk and that the policy is in your hands and you have thoroughly read the terms and conditions of the said policy before you cancel the old one even if it means for one month that you pay twice through a policy overlap.