Comparison sites can make buying financial products on the web transparent and hassle-free. But when it comes to comparing life insurance, not all comparison sites are what they seem.
Ray Black of Money-Minder warns: “Some websites that claim to provide quick quote comparisons for life insurance and other protection products do not provide an online comparison of anything. What they will do is ask some very basic questions about your age, the cover you’d like and the term you’d like it for, which all suggest you will soon get an online quote. Then they will take some other personal details such as your phone number and email address and then right at the very moment when you expect to see a range of insurers and premiums for you to peruse at your leisure a message appears saying that one of their advisers will call to discuss your requirements. No online quotes, no transparent comparison just the prospect of many conversations with a pushy salesman. Just the thing you were hoping to avoid by using an online service in the first place."
If you are not completely certain that all you are going to get is the comprehensive online comparison you are after and not an unwanted phone call from a telesales person, use a false name and contact details when generating your quote. It won’t affect your quote but it will protect your privacy. Once you hit ‘submit’ you’ll either get your quotes and be able to compare them before deciding your next step or you’ll get the dreaded ‘we’ll be in touch’ message which of course they won’t be if you’ve given them a false name and a dud phone number.
Some online life insurance comparison services are only interested in selling your details on to other life insurance brokers. Life Insurance brokers often pay some comparison sites over £40 per lead for the checked and verified contact details of someone doing a life insurance comparison. For one leading comparison site the customer has to un-check a box in the small print at the bottom of the page of comparison search results if they do not want to be contacted.
A customer comparing life insurance quotes with a comparison site could actually be contacted by telesales people from any number of life insurance brokers willing to pay for that lead. The customer may also feel that they’re still dealing with someone from the comparison site they first gave their details to, but by then their details may have been passed across to one or more third parties. Having already paid out to buy the lead from the comparison site the broker must make a sale to recoup their costs. Hence telesales people are tenacious in trying to ensure you buy something from them often calling frequently over several weeks until they get a sale or give up.
Many of the cheapest premiums offered by online life insurance brokers are based on the customer paying the broker a one-off administration fee of around £35.00. In return for this one off processing fee, these online discount brokers sacrifice all of the commission they would usually receive from the insurer. The benefit to the purchaser is highly competitive premiums. In comparison, a broker who has already paid out £40.00 or more to buy just one set of contact details can’t afford to offer a commission free service - because they would be losing money.
Don’t be pressured into buying life insurance from a telesales person unless you are completely happy that you are getting the right insurance cover at the best price. If you know what you need, use an online discount broker with a genuine online quote comparison service to find the cheapest possible premiums. £3 a month difference in your premiums may not sound like much but over a 25-year life policy it adds up to an extra £900.
Some comparison sites suggest that they offer free telephone advice when buying life insurance and protection products and this will appeal. However, although you may not be charged a separate fee for receiving advice the monthly premiums will almost certainly be higher than someone who has chosen not to get advice.
The term ‘Free Advice’ can be misleading because even though the broker may not charge an extra fee for providing advice, the policy will cost more per month than if it were provided by a discount broker who sacrifices some or all of the commission that would normally be payable to them. Always check how much difference there is between premiums for the same policy with different brokers and if you can't see a discernible difference in what you're getting for your money, it's likely that the only real difference is the level of commission that the broker is expecting to receive if you apply for a policy via them, with or without the provision of so called 'free' advice!
Often the cheapest premiums returned on a life insurance comparison are what are known as ‘reviewable’ premiums. This means that the life insurer can look at your insurance premiums at set times over the term of the policy and decide whether to keep the premiums the same or increase them. Guaranteed premiums will remain the same throughout the term of the policy from the first month’s premium to the very last. They will not change regardless of changes to your health or the fortunes of the life insurer.
Life insurance: News update: 11 January 2010