Life Insurance is an important subject, I feel, in today’s day and age, bearing in mind the crazy lifestyle most of us are used to living these days. Things like cancers & depression are on an all-time high with every 2 in 3 people being diagnosed with cancer once in their lifetime (as per a recent statistic report). I personally feel life insurance is definitely something one must think about, especially when you have a family to look after.
With over 10 years of industry experience I’d try to put some light on some lesser known facts about life insurance & would uncover some very common myths that have been circulating in the market for the longest time.
Myth No. 1: Life Insurance taken out online would always work out cheaper as you don’t have to pay any broker fee or to any intermediaries for arranging the policy.
Fact: There’s never any difference in price whether you set it up directly i.e. online or through a broker. In fact, life insurance taken out through an independent financial adviser (or a broker) usually works out even cheaper because the brokers get a commission directly by the providers for arranging your policy & more often than not, they sacrifice a part of their commission to bring the premiums down for you. So not only do you get a better price, you also get a qualified adviser to work on your behalf to get you the best deal. The onus is open him or her to ensure the policy is done properly and you’re covered under the financial services compensation scheme should anything go wrong with the policy tomorrow.
Myth No. 2: All the brokers are the same; you could take out a policy through anyone.
Fact: There’re two different types of broker firms in the market viz. “Advised” & “Non advised”. Although they’re both regulated & governed by the Financial Conduct Authority (FCA), the overall governing body in the financial industry & the compliance is extremely strict in both the cases, the guidelines for both of them are different to each other. So while with the non-advised the onus is on the customer if after a few months, years or what have you, they were not happy with the policy they took out, with companies working on advised basis, they’ve got to be bang on with the advice they’re giving to the customer. They don’t just leave it with you to decide what you think is best for you, they instead make a recommendation based on your circumstances & requirements. So they have a much bigger liability, they’ve got to justify each of their advice to the compliance team; but even among the advised based brokers, every adviser has a different outlook so they can sell their point of view & justify it too. So unfortunately there’s not really a formula there to find a good adviser except for reading reviews about them online, if available.
Myth No. 3: Life Insurance doesn’t pay out when the claim is made.
Fact: As per the report from The Association of British Insurers (ABI), 98.3% of all the claims made last year were paid. So as far as the declined cases are concerned, it happens only due to lack of disclosure. So it is advisable to go through an independent financial adviser plus be honest about your medical history to ensure when a claim is made, it gets paid.