Life insurance - direct or broker?

martyp

Hi all,

The broker that got my current policy for me are harassing me for a review after 4 years.
At the moment I pay £20 a month with Zurich for life with critical illness. It covers £40k non decreasing, my mortgage was just under that back then.
What I noted was the £525 in commission that went to the broker.
I've noticed that cashback is amazing for life insurance policies so thinking I'd favour going direct. Having looked at the "best ones" L&G seems to rank highly and are quoting £12 a month with £85 potentially in cashback (or £100 Amazon vouchers) for life with critical illness. They seem to cover a wide range of illnesses.
That would be for £30k as I have only £28k left on the mortgage (50% shared ownership).

So on paper, saving £8 a month and getting £85 or £100 back sounds better than a broker getting the commission but is life insurance more complex than I'm thinking?

DullGreyGuy

Life insurance isnt complex, CI is. 

You are saving £8 a month and £100 cash back to lose £10,000 of cover. Hopefully you will never claim and be quids in but clearly you would need to live over 100 years to be quids in and be better off were you to need to claim.

martyp

Thanks, I did note that the broker does a report with ciexpert.uk which offer a one day trial so considered that too.
I might try revising the quote to £40k and see what the premium comes out as. I did worry about the possibility of ending up not covered by something in CI which may be covered in the current policy.

Also I'm hoping with overpayments to pay off the mortgage balance in about 5-8 years if I can but need to face buying the other half of the house so will review my policy then. No dependents also so thinking the purpose would be to wipe off the mortgage as such but will further review the CI aspect

DullGreyGuy

martyp said:

I did worry about the possibility of ending up not covered by something in CI which may be covered in the current policy.

Also I'm hoping with overpayments to pay off the mortgage balance in about 5-8 years if I can but need to face buying the other half of the house so will review my policy then. No dependents also so thinking the purpose would be to wipe off the mortgage as such but will further review the CI aspect

There are others on here that are much more clued up on the different CI policies out there but staying at the same level of cover often a newer policy is better because it reflects modern medicine. A relative's CI claim was rejected because the policy required open heart surgery but 15 years after taking the policy out his condition was treated by keyhole surgery even though at the time he bought the policy it would have been open heart.

It is however very possible to take steps down in quality, losing cover for permanent sign off from work for example. It can be false economy.

When you buy CI cover it rarely adds anything material to include Life as well. If you have no dependents then the life component is fairly questionable right now but for the sake of pennies may well be worth having in case circumstances change. There would still be the question of how you would cope if for example you became a wheelchair user, could you afford to adapt your home or would you be forced to move anyway? What are you plans for income if you are to ill to work for 3 years? Ever again?

martyp

Thanks, really appreciate the advice as was more focussed on the life side so definitely considering the CI bit more. I'll compare the current cover to a potential new policy. I had a relative have their whole mortgage paid off not long after they bought the house as a result of a serious medical condition so will definitely focus on it.
I have ASU cover as well but that only pays out for 12 months so something that will help longer term will be better.

DullGreyGuy

martyp said:

I have ASU cover as well but that only pays out for 12 months so something that will help longer term will be better.

Remember also that its just an annual policy so its premiums can go up substantially at renewal if the provider wants or they can not offer a renewal (there is a thread from earlier today of someone complaining that their insurer has declined to renew their policy after many years).

You may want to consider looking at PHI which is the full fat version of AS (it doesnt have unemployment cover but some have it as an add on). Personally, I'd rather my income is guaranteed than a lump sum and PHI isnt for specific medical conditions.

martyp

Excellent, thanks. I'll look into that. My life insurance was a fixed price but thankfully the ASU has remained the same with the current provider. My last one kept putting it up every year.
I know unemployment insurance was hard to find during Covid times, might be coming back again now.

kingstreet

Wouldn't you want to be able to purchase the unowned share if anything happened to you? Insuring only the mortgage may be an error.

Weighty1

martyp said:

Hi all,

The broker that got my current policy for me are harassing me for a review after 4 years.
At the moment I pay £20 a month with Zurich for life with critical illness. It covers £40k non decreasing, my mortgage was just under that back then.
What I noted was the £525 in commission that went to the broker.
I've noticed that cashback is amazing for life insurance policies so thinking I'd favour going direct. Having looked at the "best ones" L&G seems to rank highly and are quoting £12 a month with £85 potentially in cashback (or £100 Amazon vouchers) for life with critical illness. They seem to cover a wide range of illnesses.
That would be for £30k as I have only £28k left on the mortgage (50% shared ownership).

So on paper, saving £8 a month and getting £85 or £100 back sounds better than a broker getting the commission but is life insurance more complex than I'm thinking?

How long has the existing Zurich plan been in force?
When you took it out were you accepted with the standard terms?
Has anything significant occurred with your health since taking that policy out?

Are you sure the £12/month option is for both life AND critical illness, not TERMINAL illness?  I ask because you mention about wanting to have the mortgage repaid in the next 5-8-years and possibly buying out a partner from the property.  This leads me to think you aren't that young and have maybe had a mortgage in place for a good few years?  This then makes me think that a £12/month premium is incredibly low for life and critical illness.

martyp

kingstreet said:

Wouldn't you want to be able to purchase the unowned share if anything happened to you? Insuring only the mortgage may be an error.

Good point, only thing is I would be guessing the value of the other half as it hasn't been surveyed as such. It might be anywhere from around £60-100k, hard to say. I could increase the amount covered to say £130k possibly. I've experimented a bit with the CI element and that definitely bumps up the premiums.

martyp

Weighty1 said:

martyp said:

Hi all,

The broker that got my current policy for me are harassing me for a review after 4 years.
At the moment I pay £20 a month with Zurich for life with critical illness. It covers £40k non decreasing, my mortgage was just under that back then.
What I noted was the £525 in commission that went to the broker.
I've noticed that cashback is amazing for life insurance policies so thinking I'd favour going direct. Having looked at the "best ones" L&G seems to rank highly and are quoting £12 a month with £85 potentially in cashback (or £100 Amazon vouchers) for life with critical illness. They seem to cover a wide range of illnesses.
That would be for £30k as I have only £28k left on the mortgage (50% shared ownership).

So on paper, saving £8 a month and getting £85 or £100 back sounds better than a broker getting the commission but is life insurance more complex than I'm thinking?

How long has the existing Zurich plan been in force? Since March 2019
When you took it out were you accepted with the standard terms? Not too sure, where can I tell as it was via the broker?
Has anything significant occurred with your health since taking that policy out? Not that I can think of

Are you sure the £12/month option is for both life AND critical illness, not TERMINAL illness?  I ask because you mention about wanting to have the mortgage repaid in the next 5-8-years and possibly buying out a partner from the property.  This leads me to think you aren't that young and have maybe had a mortgage in place for a good few years?  This then makes me think that a £12/month premium is incredibly low for life and critical illness.

The L&G quote covered:

£47,654 (minimum) decreasing

Terminal illness cover included

Critical illness cover of £11,914

Cover length of 10 years

Sorry no partner to buy out, mortgaged only in my name. The other 50 is shared ownership with a housing association. I'm in my 40s, bought the house in 2005