I’ve been speaking to a broker about buying income protection and a new life insurance policy. They’ve been really helpful and recommended a couple of policies that suit my needs.
The thing is, I double checked with the insurer directly, and they’ve said I can have the same policies exactly but with a lower premium.
Now I don’t know whether to stay with my adviser and pay more? Or go to the insurer and by-pass him, which doesn’t seem that fair after he’s helped me. How can this happen and what should I do?
A reader is wondering whether she should go with a direct insurer as it provided her with a far cheaper quote than her insurance broker didc
Angelique Ruzicka from This is Money replies: The ‘going direct vs. broker’ debate is an ongoing one. There are pros and cons to using a broker as well as going direct.
Ask yourself what made you go with a broker initially?
Remember that unlike call centre agents, brokers are able to give you specialist advice and guidance on the products that best suit your needs.
Brokers could also be really useful if you or your dependents need to make a claim. They could take all the hassle and stress out of it for you by speaking to loss adjusters and claims departments on your behalf.
Insurers won’t always offer every type of cover when you go directly with them so make sure the policies are like for like when you make a comparison.
Emma Walker, chief marketing officer at LifeSearch, says: The first question you want to ask any broker or adviser is: Are you searching whole of market?
If the answer to that question is a yes, then the broker will be looking at every insurer out there and doing all they can to match you with the one who can meet your needs in the most comprehensive, cost-effective and efficient manner possible.
Potentially the discrepancy in premiums between what your broker came back with and what the insurer quoted was down to health/hobby/occupation disclosures.
All of these areas can impact a premium and it could be that your broker provided a medically underwritten quote, whereas the insurer didn’t ask about any of these things and thus provided a lower price.
If that is the case, you can simply speak to the broker and say how much you appreciated their time and effort in making the recommendation, but you’ve gone to the insurer directly and been quoted a lower amount. They will potentially be able to match that price.
The most important thing to consider in all of this is that income protection is the most likely of all forms of life or illness cover to be reviewed on a regular basis because, if your job or earnings change, the policy you originally set up may not be valid.
Allan May, of broker Cavendish Online, advises customers to talk to their broker if a direct insurer has offered them a better quote. Chances are that the broker will match that price
Your broker will get in touch with you every few years to check in and make sure the cover you set up together is still adequate. The only communication your insurer will have with you is when they take your direct debit every month.
Additionally, by taking out the cover through your broker you have someone to support you with the medical questions.
Something you may deem as harmless or irrelevant could be tremendously important in the eyes of the insurer. If you do not disclose it on your application, you put yourself at risk when it comes to claiming as the insurer may decline due to non-disclosure.
Added value services like free trusts and a claims team who will help you or your family in your time of dire need are also benefits brokers can offer that insurers cannot. In life it is always good to have a person you trust helping you in matters you do not fully understand.
I barely even know how to check the oil in our family car, but I have a mechanic I trust who does great work and charges me a fair rate.
You and your family’s needs will change over time, as such your protection policies will change too. It’s good to have someone in your corner with whom you have a friendly trusting relationship and who can also provide you with expert advice.
I would suggest going back to the broker with your new quote, ask them to explain why their quote was higher. See if they can match your quote and then forge on with that relationship for the future.
Allan May, advised department manager, at This is Money’s life and protection insurance partner Cavendish Online says: ‘When we advise clients and make recommendations for their cover, we use our expertise to research the whole market to identify which provider will be the most appropriate for their needs.
‘We also research other factors which may impact on the cover, in terms of the policy becoming more expensive after underwriting (loadings on the premium), or exclusions being applied.
‘All of these elements come into consideration when recommendations are made, and we try to give people an indication of how much the premium may be once the policy is underwritten.
‘When you go direct to the insurer, this simply doesn’t happen, as you will likely go through on an ‘execution only’ basis. You will not have any idea of how the provider will treat your application until it has been fully underwritten – meaning it could well become more expensive than your broker’s quotation entirely.
‘You should also consider this in conjunction with the fact that a discount broker, such as Cavendish Online, sacrifices some of the commission received from the product provider to bring costs down for you. As we understand it, when you go direct to insurers, they typically retain 100 per cent of the commission, making the premiums more expensive.
‘On the rare occasion that going direct to the insurer is genuinely cheaper than the quotation you’ve received from the broker you have spoken to – but you really value the time and effort your broker has put in – talk to them.
‘We will always endeavour to match or beat any identical quote to ensure you get both the best price and the best service possible.
‘Pricing aside, there are some fantastic benefits of going through a broker that you may not be aware of.
‘Foremost, you’re receiving tailored financial advice and are building a relationship with your adviser, so you can be confident that what is being recommended really is appropriate for you at this time.
‘This relationship doesn’t end as soon as you purchase the cover. At Cavendish Online we contact all of our advice clients on an annual basis, helping ensure the cover is still suitable over time and arranging alternatives if necessary.
‘Going through a broker also means that you have someone going through the application process with you every step of the way, someone who has a duty of care to ensure everything in the application process is handled correctly and administered promptly.
‘We find that an increasing number of clients are concerned about what would happen should their loved ones or themselves need to make a claim too. Having a professional and knowledgeable adviser to go through the entire process cannot be underestimated.’
THIS IS MONEY’S FIVE OF THE BEST PROTECTION INSURANCE DEALS
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