Thursday, 21 March 2019

Are all life insurance comparison sites the same?

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 you’ll 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.

How do life insurance comparison sites work?

Let’s 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.

Legitimate comparison websites

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 you’d like, the amount of cover you’d like and how long you’d 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.

The cheapest premium may not be your cheapest premium

For around 70% of people, the premiums shown when completing a ‘quick quote’ 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 they’ve 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 don’t see these premiums at the outset.

Health conditions may affect the final quote

Once you’ve set off down a route with an insurer because they quoted the cheapest premium, by the time you’ve 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, ‘Ok, I’ve come this far, and I’ll 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 it’.

However, a different insurer may have ‘rated’ your condition completely differently, so differently in fact that it might not have affected your premium at all.

Use a comparison site that includes your medical history

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.  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 Telegraph’s 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.

Sites which offer you a comparison but then don’t

In the last few years, a number of websites have sprung up which offer customers ‘cheap’ 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.

Look out for ‘lead farmers’

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 ‘Get quotes’ 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 site’s partner brokers. You won’t get an online comparison at all. These types of sites are known as ‘lead farmers’. They collect your personal information and sell the ‘lead’ on to advisers looking for new business.

Advisers typically pay £30-£40 per lead but can pay over £100 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 ‘buys’ your information and who therefore contacts you.

Be prepared for a hard sell

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 won’t convert into a sale, despite their best efforts.

Advisers who buy leads will have to recoup whatever they’ve spent on those leads before they make a profit. So if they buy three leads for a total of £100 but only convert one to a sale, they must make at least £100 commission on that sale to cover their lead costs.  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 .

Extra help if you need it

When using the Telegraph’s online comparison service, customers have three options of the service they’d like to receive.

Buying life insurance online

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.

Additional guidance

If you’d prefer to get a little extra help with the process, but don’t necessarily need advice, the guided service will help you navigate the comparison and application process. You won’t be told what to buy but speaking to one of Cavendish Online’s 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.

Getting more advice

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 Telegraph’s service, provided by Cavendish Online, you are in control and decide what level of assistance you need, from none to fully advised.

Protect your family’s lifestyle by purchasing life insurance through The Telegraph

Telegraph Life Insurance brokerage service is brought to you by Cavendish Online Limited. Telegraph Financial Solutions Limited is an Introducer Appointed Representative of Cavendish Online Limited, who are authorised and regulated by the Financial Conduct Authority (FCA No 469385). Registered Office: 20 Cathedral Yard, Exeter, EX1 1HB. Telephone 03456 442544. Registered in England No. 04045709. 

The The above article was created for Telegraph Financial Solutions, a member of The Telegraph Media Group. For more information on Telegraph Financial Solutions click here


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