Detail provided by Lorna Young FPFS, Director at Pensionlite.
We all routinely purchase various insurance products throughout our lives including motor, travel, and home insurance and do so easily without seeking financial advice. In these cases, online comparison websites are an excellent tool for comparing quotations from a range of insurers and have introduced a great deal of price transparency to the market.
This ease and simplicity in the insurance market for routine insurance products has inadvertently created a misleading sense that policies fitting the tick box criteria you input on the webform are like-for-like. The reality can be far from this and unfortunately, this often only becomes apparent in the eventuality of a claim, when it’s essentially too late.
Here’s why more people are starting to engage an adviser for products such as life and income protection.
1. The no-advice route isn’t necessarily cheaper
There’s a common and understandable assumption that engaging an adviser to set up protection products costs more than doing it yourself. However, in many cases, this isn’t true.
We sought quotes from the top four money comparison sites and in every case where we looked to obtain life insurance for a 36-year-old, non-smoker, we were able to provide a 20% lower price quotation. This would typically add up to thousands of pounds over the course of the policy.
In a broad sense, this is because protection comparison sites need to make several assumptions about you when providing a quotation whereas a financial adviser holds experience and an understanding of how best to fit the product to you and your lifestyle.
2. An adviser takes care of the legwork
From our experience, applying for protection products through an adviser saves approximately 1/3rd of the time, in comparison to applying yourself. Being able to bypass certain elements of the process that are in place exclusively for selling products direct to the public and having an understanding of each provider’s strengths and weaknesses from the outset can be a significant time saver.
3. Somebody is accountable – your protection is protected
In the event that your protection product turns out to be unfit for purpose, you have little to no recourse if you arranged it yourself. You are responsible for judging the suitability of your policy. Where an adviser has made a recommendation, such a recommendation is backed by qualifications and financial protection. Would you prefer knowing that your protection is protected?
4. Tailored product, that fits you and your circumstances
An adviser has the experience and expertise to understand the different types of cover available and prioritise the most important. They have access to statistics setting out the likelihood of making a claim under a certain type of cover, and which protection providers offer the best terms for pre-existing conditions and risks for example.
Introducing Joe – A Protection Case Study
Joe had held life insurance for 20 years and as part of a cost-saving exercise, he looked at whether his existing life cover term assurance could be provided elsewhere for a lower premium. He spent some time researching, quoting and eventually took out a new policy with equivalent cover for a lower premium. Joe was diligent enough to make sure he didn’t cancel his existing cover until his new policy had begun. Unfortunately, Joe passed away shortly afterwards.
What he hadn’t noticed in his research, however, was that the new policy did not cover certain claims within the first month of the plan and as a result, Joe’s family did not benefit from the cover and the plan ended worthless. Had Joe taken advice, this information would have been pointed out to him and if it hadn’t, there would be recourse for the family.
By arranging protection through an adviser, you’re saving time, and potentially money, and giving yourself a level of protection that truly does afford you the peace of mind you originally wanted when you began seeking a protection product.
