Life insurance: Lots of websites will offer to find you the best price for life insurance, but are they all as they seem?
Go online and youâll find plenty of websites offering to find you cheap life insurance. As well as the better-known price comparison sites there are lots of other services suggesting you enter a few details to get an instant quote. But beware of the hidden pitfalls that could cost you thousands of pounds.
Letâs start by separating the legitimate price comparison sites, those which instantly enable you to compare premiums online, from those websites which have sprung up to take advantage of the unwary.
Everyone can probably name at least one price comparison website. They typically compare several types of financial products and when it comes to life insurance they will ask you basic information such as your name, age, the type of cover youâd like, the amount of cover youâd like and how long youâd like the cover to last for.
They may also ask about your occupation, your height and weight and whether or not you smoke or vape. They will then show you a range of possible premiums from their panel of life insurance providers.
When setting premiums, insurers take account of any costs such as fees and commissions they must pay. Comparison sites can also adjust the premiums you pay based on the commission they wish to earn. Both will affect the premiums you are offered in comparison search results.
For around 70% of people, the premiums shown when completing a âquick quoteâ search, giving just basic personal information, will be the premiums they eventually pay. These are the people insurers refer to as being a standard risk based on the information theyâve input so far.
However, around 30% of people will find that once they provide more information about their health or medical history, the premium they are then offered can jump substantially, maybe even double. The problem is that on most comparison sites you donât see these premiums at the outset.
Once youâve set off down a route with an insurer because they quoted the cheapest premium, by the time youâve completed their underwriting (when they find out all the information they need) even if they double your premium due to a health issue, you may think, âOk, Iâve come this far, and Iâll probably pay that wherever I go because I have diabetes or a heart condition or depression so I might as well accept the higher premium and be done with itâ.
However, a different insurer may have âratedâ your condition completely differently, so differently in fact that it might not have affected your premium at all.
So how do you avoid paying more than you have to? The simplest way is to use one of the few comparison services which asks you to answer some extra medical questions at the start and then shows you the premiums you will be offered based on your medical history, not just the standard rated prices.
The differences between insurers can be substantial. Â The good news is that The Telegraph has partnered with leading broker Cavendish Online and they are one of the few comparison services which can show you the actual premiums you should pay based on your personal circumstances.
The Telegraphâs life insurance comparison service, provided by broker Cavendish Online, can help you find the right insurance policy for your circumstances at a competitive price. Also, the service gives up a percentage of the commission payable by the insurer so that we can offer you lower premiums – lower even than you would pay by going to the insurer direct.
In the last few years, a number of websites have sprung up which offer customers âcheapâ life insurance. They look much like most other comparison services and may even have the names of those services within their google adverts, web address or on their web pages. But all is often not as it seems. These work differently to the legitimate comparison sites described previously.
Once you have put in the basic information about the cover you need along with your contact information you will usually press a button which says âGet quotesâ or something similar.
If you look carefully you might see that by pressing that button you agree to be contacted by phone or email by one of the siteâs partner brokers. You wonât get an online comparison at all. These types of sites are known as âlead farmersâ. They collect your personal information and sell the âleadâ on to advisers looking for new business.
Advisers typically pay ÂŁ30-ÂŁ40 per lead but can pay over ÂŁ100 depending on the quality of the lead and the earning potential it offers to the adviser. Whilst these advisers may be completely legitimate, you have no control over who âbuysâ your information and who therefore contacts you.
You may not be bothered about being contacted by an adviser, you may even think it would be helpful, but there are two things to bear in mind. The adviser has paid for your information and the only way he or she will make that back is to sell you something, so be prepared for the hard sell. They will also have bought leads which wonât convert into a sale, despite their best efforts.
Advisers who buy leads will have to recoup whatever theyâve spent on those leads before they make a profit. So if they buy three leads for a total of ÂŁ100 but only convert one to a sale, they must make at least ÂŁ100 commission on that sale to cover their lead costs. Â Having to make that level of commission or more means the customer they do sell to is likely to pay a higher premium to pay for all that commission .
When using the Telegraphâs online comparison service, customers have three options of the service theyâd like to receive.
The online route provides the lowest premiums and is ideal if you know what you need and can use the online tools to help you make your selection and purchase without needing to talk to an adviser.
If youâd prefer to get a little extra help with the process, but donât necessarily need advice, the guided service will help you navigate the comparison and application process. You wonât be told what to buy but speaking to one of Cavendish Onlineâs experts on the phone if you have some basic questions, may give you the extra information and confidence you need to help you choose the right cover.
If you would like advice about the type and amount of cover you should have or if you have some complex medical issues requiring additional expertise to find the right policy for you, you should talk to an Adviser. The Adviser will speak to you on the phone, examine your circumstances in detail and then make recommendations on the right course of action based on the information you provide.
The premiums are slightly higher to reflect the cost of providing advice, but because we discount a percentage of the commission, even on advised cases, you will still pay less for your insurance than if you went direct to the insurer.
With the Telegraphâs service, provided by Cavendish Online, you are in control and decide what level of assistance you need, from none to fully advised.
Protect your familyâs lifestyle by purchasing life insurance through The Telegraph
Telegraph Life Insurance brokerage service is brought to you by Cavendish Online Limited.Â Telegraph Financial SolutionsÂ LimitedÂ is anÂ Introducer Appointed Representative of Cavendish Online Limited, who are authorised and regulated by theÂ Financial Conduct AuthorityÂ (FCA No 469385).Â Registered Office:Â 20 Cathedral Yard, Exeter, EX1 1HB.Â Telephone 03456 442544. Registered in England No. 04045709.Â
The The above article was created for Telegraph Financial Solutions, a member of The Telegraph Media Group. For more information on Telegraph Financial SolutionsÂ click here