Life Insurance Policy Do’s
- Regularly review your life insurance policy and amend it if your circumstances change. Examples could be the birth of a child, a change in occupation or an increase in your debt.
- Cover your main debts and outgoings, from mortgages and loans to outstanding credit card debts.
- Put your life insurance policy in trust. This ensures that any pay-outs made on your life insurance policy will not be subject to inheritance tax. You only need to fill in a few forms and it’s completely free. Your life insurer can guide you through this process.
- Snap up a good life insurance deal as early as possible. When it comes to the price of the best life insurance policies, age works against you, so it’s typically cheaper to buy life insurance when you’re younger.
Life Insurance Policy Don’ts
- Don’t accept the rate offered by your mortgage lender. Often people ask if they need life insurance to get a mortgage. To get a mortgage you will usually need life insurance if your children or partner rely on your income to pay the mortgage; however mortgage lenders can offer overinflated prices. Get your life insurance policy separately and make sure you find the lowest price you can.
- Don’t forget to factor in future costs. When calculating how much life insurance you need, don’t forget to factor in your children’s school fees, potential university fees, home improvement costs etc. But try not to overestimate, as this can result in higher premiums.
- Don’t underestimate the value of a stay at home parent. Legal & General released a report revealing that replacing the work of a full time mum can cost upwards of £32,000 a year.
- Don’t buy joint life insurance if you don’t need to. It used to be the case that it was significantly cheaper to take out a joint life insurance policy with your partner. However in some cases this is no longer true, so it may be worth looking into two separate policies. This way, if one policyholder dies, the other policyholder can keep their policy. Effectively, this means that you get double the cover for your money.
A lot of providers are no longer accepting direct business it has to be via intermediaries such as ourselves
Many people mistakenly believe that they can get a better price on life insurance if they buy direct from a life insurance company, rather than going through a broker. But this is a complete myth.
There are multiple reasons why you are likely to pay less – and get a better life insurance policy – if you purchase it through broker.
You don’t know as much about life insurance as you think
There is a saying – “a little bit of knowledge is a dangerous thing” – and that’s about the knowledge that most of us have when it comes to life insurance – a little bit. The problem is that we may take that little bit of knowledge and use it to buy a life insurance policy direct from an insurance company, thinking we know enough to do this. But that’s not always the case – consider the following:
Knowing what the “fine print” means. Most of us have little comprehension of the various provisions that are included in the typical life insurance policy. Worse, we may even gloss over those provisions, thinking them to be industry gobbledygook that really doesn’t mean anything. That can lead to unpleasant surprises down the road, and can even cost our beneficiaries money in a claim. Brokers understand insurance jargon, and they know what matters and what doesn’t. If nothing else, you need an insurance broker to “translate” insurance-speak into English.
It’s not all about finding cheap rates. It will do you little good to get the cheapest life insurance possible if it contains provisions and exclusions that would prevent your loved ones from getting benefits in a time of need. This is often the case with certain very low cost life insurance. An example is no medical exam life insurance. These are limited policies that contain exclusions. If you don’t understand what it is you’re getting into, you can pay for a product but get no benefit out of it. There’s nothing cheap about that, and a broker will recognize the difference immediately.
Important riders. There may be certain important policy riders that you should have included with your life insurance. Unfortunately, you won’t know anything about these unless you have a knowledgeable person directing the insurance process. For example, it may be beneficial – and very cost effective – to have a “double indemnity” policy rider. That’s a provision that allows your beneficiaries to collect double the face amount of the policy in the event that you die from certain accidents. There are numerous riders like this one, that a broker will know about and you probably won’t.
It won’t cost you anything extra to use an insurance broker
For the most part, it is thought that it will cost more to buy life insurance through a broker because a commission will be paid for their involvement. In truth, it will cost no more to get a life insurance policy with a broker. The life insurance company will pay a portion of the premium to the broker for bringing your business to them, but it will cost you nothing extra as a result.
Insurance companies offer “discounts” to brokers, in much the same way that hotels, car rental companies, and airlines offer discounts to travel agents. For example, the insurance company may offer a 15% discount on a life insurance policy for a customer provided by the broker.
The customer will be charged 100% of the premium – just as they would if they bought direct from the company – and the company will pass the 15% discount on to the broker. The customer will pay the same amount, whether they go through a broker, or they go direct. In the end, there’ no savings from going direct.
You may even pay less
Ironically, you may even end up paying less by using an insurance broker. Insurance brokers know where to get the best deals on life insurance, and will often get you a lower premium than you can get on your own.
If you try to deal direct with the insurance company to buy your policy, thinking that you’ll get the benefit of any savings as a result of not using a broker (and paying a commission), the exact opposite can happen. You’ll likely end up paying more for the policy than you would if you used an insurance broker to find it for you. You will miss out on the better, lower cost policies that the broker knows about – and you don’t. After all, you don’t work in the industry and can’t possibly know.
There are some areas in life where DIY – do it yourself – doesn’t work. Buying life insurance is one of them.
Comparison sites are not always the best
The policies you’ll be offered are generic so we are the best option if you want a policy that meets your individual circumstances.
We are experts in the market and – even with run-of-the-mill insurance – we will often find you better cover at a better price.
Our expert advice is free.
You don’t pay a fee for us shopping around to get you the best deal.
Unlike comparison sites we have specialist expertise and can give you advice on the products that best suit your needs.
- Comparison sites and insurers won’t always offer you every type of cover when you go directly to them.
- We can help point out the types of cover available from the insurers and help you work out what you need.
- We will find the right product for you. We will ask you about your personal circumstances to find you the right policy.
- We are also able to tell you if you’re already covered by existing insurance policies so you don’t overlap, and we will always get you a good deal by comparing prices and product features.
- On comparison sites you might not find cover for things – like income protection or critical illness – that need to be tailored to suit your needs.
- You also won’t find special or bespoke cover on comparison sites whereas we can ensure that your policies are designed especially for you and your circumstances.