Approached for life assurance churning - with cashback offer

IdrisJazz

I've been contacted by a firm (which I have had some dealings with before, so not scammers) offering to try and match or beat my existing life cover premiums PLUS paying up to £1000 cashback (this would obviously depend on the commission involved).

I have mixed feelings about this. I'm not sure I approve of "churning" activity - cancelling and taking out new cover - when circumstances haven't changed. But of course I could end up paying less, with the possibility of a small bonus as well.

But I am only paying £25 a month across two policies for £335000 cover, so I don't feel any savings will make a lot of difference to my lifestyle.

Just wanted to get the thoughts of others before I go any further. This doesn't sit comfortably with me at the moment, but not sure if I'm just being unnecessarily ethical.

Thanks

DullGreyGuy

At the end of the day, if they are willing to do the work then what's the harm in seeing what prices you get quoted? Depending on how old the other policies are and how your medical conditions have changed will determine if they get a better price or not.

My cover is not far off yours and had a similar call a year ago or so but the new prices came in much higher than my current so a no brainer to stick with current provider.

dunstonh

I've been contacted by a firm (which I have had some dealings with before, so not scammers) offering to try and match or beat my existing life cover premiums PLUS paying up to £1000 cashback (this would obviously depend on the commission involved).

That is extremely risky for the firm and false economy for you.  Premiums are increased to cover that £1000 cashback by a greater amount than you will get back.  So, they are effectively using your money to give it back to you.

It is even more risky if they do not draw up a contract as the consumer rights act 2015 effectively outlawed the ability for a regulated firm to claim back a clawback on a policy from the consumer unless a fee agreement existed with the amounts specified.  

It would be better to take £1000 less commission and get lower premiums for the whole term.  Or maybe better still, go fee based and use commission offset to pay the fee.  i.e. the adviser only takes commission to the amount of the explicitly agreed fee.

IdrisJazz

Thanks for your comments. I would only be interested if I save money on my premiums - not looking to borrow from my future self to get a windfall now.

I have done a quick comparison quote for my main policy (£270k 19 years) and the cheapest was 25% more than I am paying now, so I doubt they'll be able to come up with anything competitive. I took that out shortly before turning 40 and am now 46, so may have passed a couple of key premium "milestones".

If I understand correctly, you're saying it's risky for them because I could play them at their own game and churn again in 12 months, and they will have their commission clawed back, and won't be able to to claim anything back from me (without a prior agreement).

dunstonh

I have done a quick comparison quote for my main policy (£270k 19 years) and the cheapest was 25% more than I am paying now, so I doubt they'll be able to come up with anything competitive. I took that out shortly before turning 40 and am now 46, so may have passed a couple of key premium "milestones".

Once you hit 40, premiums start to jump each year on new business.   So, what you are saying is in line with expectations.

If I understand correctly, you're saying it's risky for them because I could play them at their own game and churn again in 12 months, and they will have their commission clawed back, and won't be able to to claim anything back from me (without a prior agreement).

Exactly.  And not all firms realise the consequences of the 2015 act as we have seen some people post on this site since then about being chased for clawbacks.  (its all to do with you cannot be held responsible for the contract between a provider and an intermediary as you are not a party to that contract.    For it to be enforceable a new contract would be required with you and to be enforceable, it has to state the amounts and terms agreed).