How to find a life insurance broker: should I use an IFA?

If you’re shopping for life insurance, what difference can a life insurance broker make?

You may think that in the days of price comparison sites, you can find the best policy for yourself in a couple of hours.

But there can still be major advantages to using a human go-between who is an expert in life insurance – particularly if you have any special requirements that might make your life insurance more costly or harder to get.

Here’s why it can often be better dealing with an unbiased expert rather than with a comparison website.

What is a life insurance broker and what do they do?

A life insurance broker is an adviser who specialises in life insurance policies, matching buyers to policy providers.

Many independent financial advisers can also serve as life insurance brokers, analysing your needs and circumstances and then searching the market for the best policy to suit you.

Although a broker may recommend a particular policy to you, the choice remains entirely up to you.

Can I trust life insurance brokers?

Some life insurance brokers earn commission on their deals, or offer ‘free advice’ while making money solely through commissions.

This can make buyers sceptical, since if you are not paying for the advice, it is harder to be sure that the broker is really acting in your best interests.

It’s therefore important to understand the different types of financial advisers available:

1. Independent Financial Advisers (IFAs)

IFAs operate independently and do not earn any commissions.

They offer unbiased, unrestricted advice on every financial product on the market. You can use an IFA when buying life insurance.

2. Restricted whole-of-market advisers

These advisers aren’t tied to any providers but are restricted to the type of products on which they can offer unbiased advice (e.g. pensions, investments, insurance), but can advise on the whole of the market for these products.

3. Restricted advisers

These advisers are tied to particular product providers, and so cannot offer unbiased advice (therefore you won’t find such advisers on the Unbiased website).

For the most impartial advice, IFAs and restricted whole-of-market advisers specialising in life insurance are you best option.

As you are paying their fee, their responsibility is to you, so they’ll give you genuinely unbiased advice on the best life insurance for you.

Learn more: the benefits of using an insurance broker

What are the benefits of using an IFA to find insurance?

Advice tailored to you

There’s a lot you can do when buying life insurance, including using online tools to compare policies and quotes. However, life insurance is personal.

IFAs can do one major thing comparison sites can’t: they offer advice tailored to you. IFAs take account of your precise needs to make clear, customised recommendations.

Overcoming obstacles

If any of your personal circumstances might make it difficult for you to find affordable life insurance, an IFA can make a huge difference.

For example, if you:

• Work in a high risk job
• Enjoy high-risk activities or sports
• Have a long-term health condition
• Have suffered serious injury or illness in the past
• Live in an area deemed to be high-risk
• Have other special requirements or circumstances that raise your insurance premiums.

Specialist insurance IFAs frequently help people to find affordable life insurance even when they were previously deemed ‘uninsurable’, such as this example of a former paratrooper.

Life insurance is such a personal product, it’s an area where personal advice can often make the biggest difference.

Market expertise

An expert in the life insurance market will know not just every product available, but also its fine print.

This may include products that aren’t available on the high street or on price comparison sites. This means you can almost always find a cheaper or more suitable deal.

The right cover

With the support of an IFA, you can confidently apply for the right level of cover, knowing you’re not over- or under-insuring yourself or taking out a policy that doesn’t fully protect you.

Can independent life insurance brokers get better rates?

Unlike dealing directly with just one insurance company, independent brokers have a broad network of insurers at their fingertips.

This wide-ranging access enables them to explore various options, enhancing the chances of discovering more favourable rates.

Brokers use their connections with multiple insurers to secure competitive quotes that are specifically personalised to meet the unique needs of their clients.

What makes a good life insurance IFA?

All IFAs in the UK are regulated by the FCA, so you have recourse to the regulator if anything goes wrong with your advice.

In general, when choosing an IFA to help with your life insurance, you should look for one with specialist experience in this area.

More generally, your adviser should:

• Have appropriate qualifications. Look for qualifications from institutes including the Chartered Insurance Institute, the London Institute of Banking and Finance, the Institute of Financial Planning or the Personal Finance Society.
• Have a Statement of Professional Standing (SPS). This indicates they adhere to a code of ethics and undergo yearly training to stay up to date with industry changes and regulations.
• Have your best interests at heart. From the first interaction, you should get the sense that your IFA wants to know all about you. Look for IFAs that are genuinely interested in your circumstances, your goals and why you want life insurance.

What questions should I ask when choosing a life insurance IFA?

It’s up to you to select the IFA you’re most comfortable with.

Don’t be afraid to ask searching questions about their service at your free first meeting. Consider asking:

1. Are you an independent or whole-of-market adviser specialising in life insurance?
2. What services do you offer?
3. What qualifications do you hold?
4. Who is your regulatory body?
5. How many years of experience do you have
6. How do you charge?
7. What can I expect to pay?
8. Do you have any client case studies I can see?
9. Will you offer regular updates on my portfolio, or changes that might affect my financial position?
10. Why do you think you’re the right adviser for me?

Do I need to pay for an IFA?

You’ll always need to pay for reputable financial advice, but since an IFA is likely to help you find the best deal on your policy, you should get a good return.

Fees can range from a fixed to an hourly rate, and will also depend on the complexity of the work involved.

If you’re not paying someone, then ask yourself: how is this ‘adviser’ different from a salesperson?

When buying life insurance, a good IFA will give you confidence in your purchase, just as your life insurance will give you confidence in your family’s future.