Are you paying thousands more for your life insurance bought through your bank?
This is because lenders – without telling the customer – add their own mark-up to the price available elsewhere. Even going direct to the insurer will sometimes end up costing policyholders far more.
The difference between the best and worst prices for the same cover, if you add up the premiums over the term of the policy, can run to many thousands of pounds.
So where is the best place to buy your policy?
There are three main sellers of life insurance policies and other similar cover such as critical illness insurance. These are banks, intermediaries such as a broker or advisor and direct from the insurance company. Not all insurers sell their products via all three channels, but many do.
Most banks and building societies have agreements in place with insurance companies to sell their policies to customers. Many have "single-tie" deals – where they sell products from only one insurance company, which means consumers may not be aware of a cheaper deal without comparing with other insurers.
Why do you buy the first quote provided?
- When an individual or couple decide they need life insurance often they will choose the same company they’ve used before, without consideration for other companies. This is known as ‘inertia buying’ and be the easy option designed to make you feel comfortable in purchasing your insurance.
- You trust your bank to provide you with quality and well-priced cover.
- You aren’t aware that you can get cheaper premiums by comparing.
- It’s linked to a mortgage offer you have been given.
Rob Dales, life insurance expert at PayingTooMuch.com says: “The problem with buying through your bank is that people accept the first offer and don’t consider whether it is good value for money. This is then highlighted when their circumstances change and they need to amend the cover they have. They can then be presented with a far cheaper premium when shopping around than they are currently paying, and are left wondering why.
What can you do to ensure the best value life insurance?
- Consider shopping around as there are often insurers out there who can offer the same level of cover at a cheaper price.
- Don’t accept the first price given.
- Make sure you compare not only price, but policy features too. When applying for your mortgage they will likely offer life insurance, so before accepting this offer, check out other options.
- Just because your lender has offered you a mortgage, that doesn’t mean you must use their insurer/s.
For any queries or to obtain a quote, please contact Rob and the life insurance team on 01243 219972.