Updated 13 July 2020
If you’re shopping for life insurance, what difference can a 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.
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.
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:
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.
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.
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:
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.
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.
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.
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:
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:
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.
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