Income protection - how do I get it?

kimbyanne

I want to purchase income protection but it seems it all has to be done via a financial advisor.

I have looked on unbias but I don't want to pay an ridiculous fee just for someone to tell me which policy to get. Do some work on commission / get paid by the companies to recommend?

Or can I get the insurance myself?

wjr4

Commission is still fine for life cover policies.

kimbyanne

But how do I find out which ones don't charge a fee? It seems unless I ask each company individually, I wont know.


I know which type of insurance I want so I don't want to pay a fee for a broker to apply for it for me. Yet it seems you cannot purchase income protection without going through a broker / financial advisor - but they all seem to charge for their services!

Stevie_Palimo

You can do either or here if you want the whole of the market or near as searched then accept the fact that a fee will apply, If you really do not want to pay a fee then go and do individual searches yourself to the providers directly, Not hard to draft an email up and send it over to 5-10 Companies.

Quentin

Use (eg) go compare to get prices

dunstonh

Permanent health insurance (PHI) is the main type of income protection and is mostly retailed via IFAs. It has virtually no coverage on internet sites. PHI tends to come in budget, standard and comprehensive levels of cover.

The comparison sites tend to retail PPI version which is budget and often not worth the money you pay.

An IFA can work on fee or commission basis with income protection. If fee basis, the monthly cost of the insurance will be lower. If commission, there is no upfront fee but the cost of the insurance will be higher.

I know which type of insurance I want

Which type are you after?

muhandis

From what it looks like, you are going through the same thought process that I went through when looking to get IP.

Based purely on my experience researching and buying an IP policy -

1. No you can't get it online.

2. No you can't get it directly from the insurers (at least the major ones like Friends Life, L&G, Vitality, etc).

3. You will have to see (or talk to over the phone) an advisor (doesn't have to be an IFA, the advisor I spoke to only advised on Protection, nothing else) who will either charge you a fixed fee (in which case the premium will be lower) or a commission from the insurer (the premium will be higher). I got my policy through an advisor paid on commission, I could only find very few fixed fee advisors near work.

4. The quality of advise varies HUGELY, some advisors just want you to plump for the highest premium you can (or can't!) afford while others are very knowledgeable and genuinely want to make sure that the policy meets your specific requirements and you can afford the premium long term (their commission gets clawed back if you cancel within the first 2 or 4 years).

5. There aren't any "whole of market" IP advisers, most firms will have a panel of insurers which cover a range of offers - cheap-lots of features-speciality-etc, etc.

6. There is quite a bit of paperwork involved, mine was fairly easy because I got my IP through the mortgage broking firm that advised me on my mortgage so they could use the KYC information that they already had.

My advice would be to have an idea of the following before meeting an advisor
- how much money you need paid out every month in case you can't work
- how much of a buffer can you afford before the policy starts paying out (the longer the buffer, the lower the premium)
- how long do you want the policy to pay out (classic IP is until retirement age, but there are many policies now which offer a fixed period 1 year, 2 years, 5 years, etc)

Hope that helps!

K

kimbyanne wrote: »

I want to purchase income protection but it seems it all has to be done via a financial advisor.

I have looked on unbias but I don't want to pay an ridiculous fee just for someone to tell me which policy to get. Do some work on commission / get paid by the companies to recommend?

Or can I get the insurance myself?

dunstonh

3. You will have to see (or talk to over the phone) an advisor (doesn't have to be an IFA, the advisor I spoke to only advised on Protection, nothing else) who will either charge you a fixed fee (in which case the premium will be lower) or a commission from the insurer (the premium will be higher). I got my policy through an advisor paid on commission, I could only find very few fixed fee advisors near work.

IFAs have to offer a fee based option.

4. The quality of advise varies HUGELY, some advisors just want you to plump for the highest premium you can (or can't!) afford while others are very knowledgeable and genuinely want to make sure that the policy meets your specific requirements and you can afford the premium long term (their commission gets clawed back if you cancel within the first 2 or 4 years).

This is why it is important to use an IFA and not an insurance agent. The latter is sales based. The former is required to give best advice and justify it in their research.

5. There aren't any "whole of market" IP advisers, most firms will have a panel of insurers which cover a range of offers - cheap-lots of features-speciality-etc, etc.

There are whole of market IP advisers. That is what IFAs are (and a lot of whole of market mortgage advisers as long as they are whole of market in all areas).

ACG

Most brokers would not charge for income protection, they would take commision.

It is not just a case of deciding on the cover amount and thats it. There is limited payout, term, deferred period, increasing/level, guaranteed or reviewable premiums etc.

muhandis

dunstonh wrote: »

IFAs have to offer a fee based option.

As I said at the start of my post, what I wrote is based purely on my experience trying to get IP cover. So, you might be right but the couple of IFAs I talked to didn't tell me that I had the option of paying an upfront fee.

dunstonh wrote: »

This is why it is important to use an IFA and not an insurance agent. The latter is sales based. The former is required to give best advice and justify it in their research.

I completely disagree with your blanket statement. You can have poor sales hungry IFAs as well as non-IFA advisers that give great advice tailored to the customer, it all depends on the quality of the individual or firm delivering the service.

The Protection Adviser who advised me worked only on protection and was an expert at what she did. The recommendations that she sent me after a very comprehensive appointment covered all my specific requirements and explained in detail the reasoning behind the recommendation.

The couple of IFAs that I spoke to weren't particularly interested in just Protection, worked from 9 to 5.30-6, didn't take calls outside those hours, etc etc which led me to the conclusion that they didn't particularly care for my business.

My advisor on the other hand was proactive and worked around the timings that I was available and Protection being her sole business, was on hand throughout the whole (sometimes frustrating) process.

I don't know about the "insurance agents" you're talking about, but the firm that I got my advice from is FCA regulated, and my protection adviser is required by regulation to give me advice tailored to my situation, and the paperwork sent to me confirms that.

dunstonh wrote: »

There are whole of market IP advisers. That is what IFAs are (and a lot of whole of market mortgage advisers as long as they are whole of market in all areas).

Again, what I said is based purely on my personal experience. The IFAs that I talked to offered policies from 2-3 of pretty much the same range of insurers (L&G, Friendslife, LV, Vitality, etc).

dunstonh

As I said at the start of my post, what I wrote is based purely on my experience trying to get IP cover. So, you might be right but the couple of IFAs I talked to didn't tell me that I had the option of paying an upfront fee.

To be fair, most people dont pay fee for insurance. It is available but it is not something that would normally pop up unless asked.

The couple of IFAs that I spoke to weren't particularly interested in just Protection, worked from 9 to 5.30-6, didn't take calls outside those hours, etc etc which led me to the conclusion that they didn't particularly care for my business.

IFA is a term that covers different business models. I wouldn't be interested in offering my service to you either as I won't work evenings any more. I have done my time with evening calls. One of the other IFAs in my firm seems to do mostly evenings. So, I can undertand why you got that. IFAs that are predominantly investment based wont be interested either as it is not their model.

I completely disagree with your blanket statement. You can have poor sales hungry IFAs as well as non-IFA advisers that give great advice tailored to the customer, it all depends on the quality of the individual or firm delivering the service.

It wasnt a blanket statement. Yes, you can get a poor IFA and a good sales rep. However, a good sales rep cannot access the whole of market. So, best to get a good IFA.

I don't know about the "insurance agents" you're talking about, but the firm that I got my advice from is FCA regulated, and my protection adviser is required by regulation to give me advice tailored to my situation, and the paperwork sent to me confirms that.

Insurance agents work for an insurer or a panel of insurers. One of the biggest issues with insurance agents/sales reps is that their premiums are higher than the IFAs/whole of market advisers. This is not just on PHI but also on life, CIC etc. And obviously, they won't have access to the whole of market.

Again, what I said is based purely on my personal experience. The IFAs that I talked to offered policies from 2-3 of pretty much the same range of insurers (L&G, Friendslife, LV, Vitality, etc).

An IFA would have more than that available. Often you find you need to look at the friendly societies with some cases but other times, the mainstream providers will be fine. As an IFA will be whole of market, they will clearly have more than 2-3 available.

I understand you post on your experience and that is useful information. However, I believe the preference is a good IFA who works in the protection market (and evenings if required!) vs a good sales rep with limited product range and higher premiums.