Critical Illness Cover and Financial Advisors

fourmotion

Hi all, i recently had a quote for Critical illness cover from an IFA. Im a contractor at the moment so he advised it, which i feel is a good move and ive been looking in to it anyhow.

The only issue i have, is that for organising the insurance the IFA gets over £2000 commision which i pay for (indirectly over the 30 year term of cover). Does anyone else think this is extortion, considering that nothing of any real skill is involved?

I want critical illness cover, but im loathed to take it out because of the fact that i have to pay £2000 of my own money for someone to fill out forms on my behalf, when i am more than capable of doing it myself.

I have mentioned this to the IFA, and he said the commision is also for advice during the term of the 30 year cover. My reply was that, if its a fixed monthly fee of approximately £80 (he advised the fixed rather than a sliding scale due to inflation increases over the 30 yr period) , then why would i need advice on the policy, or would i ever want to change it, as that would only increase my monthly charge. I thought that was the whole point of have a fixed 30 year plan....

What are your views? Am i justified in my concerns? Should i just stop my whinging and take out the cover? Or could i take out the cover without an IFA?

Thanks in advance.

jonesMUFCforever

So rather than pay someone for advice you would rather not take out the cover.
Are you sure that you do not already have a brain disorder?

The IFA has to earn a living just like you - maintain an office and perhaps staff, heating light rent on premises and insurance against crackpots suing him for wrongful advice.

You don't work for free why should an IFA?

dunstonh

The only issue i have, is that for organising the insurance the IFA gets over £2000 commision which i pay for (indirectly over the 30 year term of cover). Does anyone else think this is extortion, considering that nothing of any real skill is involved?

You are looking at the £2000 as gross profit assuming it all goes in his pocket. It only that was the case. I operate a small firm and that costs on that are £70k a year. You are a contractor. Does every penny you charge go straight in your pocket or do you have expenses too?

Effectively, what you are asking is should you take the advice and then do it yourself to get lower charges or should you pay someone that has done a job for you. That is down to your morals or not. Another option is to pay a fee for the advice and have the policy put through on nil commission basis. That will be more expensive in the short term but cheaper in the long term as you are making an up front payment but the premiums will be lower.

fourmotion

jonesMUFCforever wrote: »

So rather than pay someone for advice you would rather not take out the cover.
Are you sure that you do not already have a brain disorder?

The IFA has to earn a living just like you - maintain an office and perhaps staff, heating light rent on premises and insurance against crackpots suing him for wrongful advice.

You don't work for free why should an IFA?

Are you an IFA by any chance? To be honest i'd rather find the cover myself than pay someone else a significant amount of my earnings. If you hand out cash so easily maybe you're the one with brain disorder. Obviously giving money away must be your forte.

This website is called MoneySavingExpert, and therefore i feel i am right to question handing over £2,000 of my children's inheritence for someone to fill out forms and post them on to an insurance company. Shouldn't i try to find the cover myself to save myself some money, cut out the middle man so to speak? I personally dont care about the IFA's overheads, i care more about the service that is being provided, how much its costing me and whether i could provide the service myself. I dont feel that filling in MY PERSONAL DETAILS in to a form, which is then passed on to an insurance company, is worth £2000.

I'd just like to add that i dont doubt that an IFA has definite benefits. Its just in this instance, i know what i want, i know how long i want it for, and i am quite capable of asking for it myself, while also filling out the relevant forms. Why should i pay for someone else to do it.

Lets try an anology here;-

You want a PC. You know what PC you want, you know exactly what specification you need, and have priced matched it on various websites and know where you're going to buy it from.
Would you a) go to the web address, fill in your details and click 'BUY' having the confidence that youve done the research and have the product you need.
or b)pay Your local IT down the road a £500 premium to go the website and buy it for you

dunstonh

Remind me to not use a contractor next time. I can save myself lots of money that way.

17Dave

Hi fourmotion
Just a thought - you say you know what you want.
Can you get it cheaper than the IFA is offering?
Will you get the right cover?
Critical Illness cover is a bit of a mine field as the medical definitions are not always the same - e.g. some companies pay out on a "silent" heart attack (no chest pain but diagnosed by a doctor as a heart attack) others do not. So the £2k may be a small price to pay to get the best cover, being advised by an IFA. You don't want to find the cheaper cover results in a claim being declined.

jamesd

fourmotion, if you know which policy you want you can just go ahead and buy it. Chances are that you'll end up buying at full commission taken by the insruance company, though you might find a web discount IFA to sell it at less cost.

The IFA has already delivered you some service from the sound of it, finding the policy that meets your cover feature needs and advising on how to reduce the long term cost. Fee option is another thing to ask about to save more money.

Filling out the forms isn't the work. Finding the right policy for your needs, advising how to buy it efficiently and taking the risk of having to pay you redress if the advice turns out to be wrong in some way is.

jonesMUFCforever

If OP knows it all why did he go to an IFA in the first place?

The look at post #3 which seems to be good common sense to me.