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Specialist life insurance brokers

People often ask whether it’s better or more expensive to apply for cover through a life insurance broker or direct with an insurer. There are pros and cons for all methods of buying life insurance, but ultimately you just need to make sure that you get the best cover to protect your family at the right price.

In the UK there are currently around 1,600 registered life insurance brokers so you’ve definitely got your work cut out for you to find the right one. This number is also made up of mortgage brokers and independent financial advisers that offer life insurance.

This guide looks at how life insurance brokers work and what they can do for you to get the best cover for you at the lowest price. Life insurance can be confusing and there are loads of different options, especially for people with complex circumstances and specialist requirements.

Here are some answers to your most common questions and some information that you will find useful to explain more about life insurance brokers.

SUMMARY: we understand that finding a trust worthy life insurance broker can be difficult and buying life cover is an important decision to get the best protection for your family. It’s important to make sure that you’re comfortable with the people that you’re speaking to, especially when disclosing private medical information.

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The term life insurance broker refers to a company or a person that arranges a life cover policy for a customer from a panel of insurance providers. A broker must be able to access a number of rates and premiums from their panel of carefully selected partners.

You might also come across the term life insurance agent, which is basically a person who also sets up insurance policies for customers, but generally these are employed by the insurer. This also means that they will only be able to offer or sell life insurance policies from one insurance provider, so will have fewer options.

When you apply for life insurance through a broker, you would be instantly have several insurers to choose from depending on their panel. Some life insurance brokers have a limited panel of insurance providers, whereas others might be whole of market and have all insurers.

Another important role of a life insurance broker is to make sure that you understand what options are available to you and to give you clear information. Buying life insurance online can be extremely confusing and for something as important as protecting your family, might not be the best route.

What does a life insurance broker do?

There are a few different things that a life insurance broker should do for you and ultimately how they can help you. The main point is that they should be helpful for you to find the right cover and they should save you time as well as money.

When you apply for life insurance through a broker, they will generally follow a similar process which is there to help you to get the cover that you need. Life insurance brokers will ask you questions about:

Once you’ve completed the ‘fact find’ process, your life insurance broker should be able to complete their research across the insurance market. This is where your broker will be able to search their insurance partners to find the cheapest premiums for the cover that you need.

How do life insurance brokers get paid?

Unlike some other financial services business, like mortgage brokers and independent financial advisers, life insurance brokers don’t charge a fee. Almost all life insurance brokers advice is free and they are generally independent.

A life insurance broker gets paid a commission from the insurance provider that they place cover with. The other good point about this is that the amount of commission that they get paid doesn’t have an impact on your premiums.

How to find the best life insurance broker

Finding the best life insurance brokers works in exactly the same way as looking for any other type of service these days.

There are several key things to look at and look for:

1)   Reviews and testimonials – you should look for independent customer reviews from websites such as Feefo and TrustPilot

2)   Website and online presence

3)   Social media – Facebook, Linkedin, Instagram and Twitter

4)   Personal recommendations – family and friends

5)   Press and partnerships

6)   Forums and online communities

Advantages of using a life insurance broker

There are advantages and disadvantages of using an insurance broker. There are several key benefits to someone using a life insurance broker to get their life cover sorted. Often these advantages should outweigh the disadvantages by a considerable margin, such as:

  • Convenience and being able to complete your application at a time and day that suits you
  • Save time and hassle by comparing premiums to several insurance companies simultaneously
  • Save money on your monthly life insurance premiums by selecting the cheapest insurer based on your circumstances
  • Less chance of being declined or refused cover and this is especially true for impaired life insurance brokers that specialise in medical conditions and other risks
  • Protect against loss from the protection that you will be provided by the Financial Ombudsman Service (FOS)
  • Get free advice so you can get the cover that you need to protect your family and your home

Disadvantages of using a life insurance broker

As with anything, there are also disadvantages when you choose to use a company or a broker for a service. The advantages are usually worth far more than any potential disadvantages, but should all be considered.

  • Premiums and cost of life insurance might sometimes be higher than applying via a price comparison website or direct. This is less relevant for people with pre-existing medical conditions who should speak to a specialist due to the need for medical underwriting
  • Not always convenient as some people work extremely long hours and so might not always work for you and your lifestyle. In this instance, an online route might be a better option for you
  • Risk of bad advice in some instances where the customer experience might not be good and you might be at risk of poor advice
  • Limited panel of insurers could also mean that you might not get the very best premiums for your circumstances

Impaired life insurance brokers

There are specialist life insurance brokers that will have specific experience and expertise in dealing with people with certain situations. These companies are often referred to as ‘impaired life insurance brokers’ which is an industry term.

Whilst we don’t necessarily agree with using the term impaired because it implies that there might be a disability or vulnerability, others do still use this terminology. An impaired life insurance broker refers to pre-existing medical conditions for most people, such as:

High risk life insurance brokers

When it comes to life insurance, high risk refers to anyone with a non-standard disclosure on their application.

High risk life insurance brokers specialise in:

Any of these disclosures on a life insurance application can have an effect on your options for cover and the price that you pay.

A high risk life insurance broker is different to a standard risk insurance broker because of their expertise in these areas and the insurers on their panel. Ultimately, the role of a high risk life insurance broker is to use their experience to save you time and money.

Benefits of a high risk life insurance broker:

  • Higher chance of being accepted
  • Specialist insurers and products
  • Lower premiums for non-standard life cover
  • Quicker and easier
  • Less hassle than applying to several insurers

High risk doesn’t always mean severe issues and can be fairly mild issues that you might not think will be an issue. The beauty of getting proper advice from one of these brokers is that they’ll be able to help, regardless of how serious your disclosures are.

Group life insurance broker

A group life insurance policy is a type of business protection that is also known as ‘Death in service’. The main difference between a group life insurance broker and other types of broker is that you really do need that type of advice when taking out this type of cover.

As a rule you, you can’t buy group life insurance without taking proper advice and there aren’t as many options in terms of insurance providers.

With this in mind, a group life insurance broker will be a sensible option for you and your business, to get the best cover at the right price.

Premiums for group life assurance can also vary more significantly than personal protection, mainly because you’re applying to cover several individuals up to several hundred individuals. This type of cover is most often used as an employee benefit and is paid for by the employer.

There are also many different elements to group life insurance that you should really take advice on, such as:

  • Levels of cover (e.g. income multiples or benefit)
  • Policy administration (i.e. leavers and joiners)
  • Renewals

Best online life insurance brokers

There are more online life insurance brokers than there has ever been before which means that you can now access rates via a number of online price comparison websites.

The main purpose of online life insurance is to give you convenience and privacy with any sensitive medical information. There are a number of benefits for online life insurance, but there are also risks so you need to be careful with using this type of service.

Online insurance quotes are a great tool for people that know what they’re doing and are comfortable with self-service options.

The flip side of this is that it can be confusing and you can end up with the wrong product that isn’t fit for your needs. Life insurance is an important purchase to protect your family and so the decision for buying life insurance shouldn’t be taken lightly.

If you’re happy and comfortable with buying life insurance online then it’s a good option, but you should speak to an expert if you’re not 100% sure.

How to find an independent life insurance broker

There are many different types of insurance brokers and most of them should be independent, which basically means:

  • They have a panel of insurance partners (providers)
  • They work on your behalf and not for the insurer
  • Their advice should be free of charge
  • They should receive a commission for their services

Some of the main things to look out for when you’re trying to find an independent life insurance broker are:

  • Do they display customer reviews?
  • Where are their customer reviews collected? (e.g. Feefo, Trust Pilot, Google etc.)
  • Do they charge a fee?
  • How long have they been trading?
  • Are they registered with the FCA (Financial Conduct Authority)?
  • Do they offer advice?
  • How many insurers do they work with?
  • What insurers are on their panel?
  • Which types of life insurance products do they offer?
  • Have they been recommended to you?

You should ask as many questions as you need to so that you’re confident that these are the right independent life insurance brokers to help you.

Life insurance pays out a cash lump sum to your loved ones in the event of your death, offering you peace of mind they will have extra financial support in place. It is important to do your research and get additional support if needed, to make sure you choose the cover that is right for you and your family.

Useful resources

Finder.com – Life insurance statistics

Statista – Life insurance industry in the United Kingdom (UK)

iam|INSURED – Frequently asked life insurance questions

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Is it worth paying for life insurance?

Yes, if you’ve got children or financial dependents then you should have life insurance to protect them if you die. Martin Lewis and the Financial Conduct Authority recommend that you take out life insurance to protect your family and your home. Generally, life insurance premiums start from as little as £5 per month and will be cheaper for younger adults.

Common myths about life insurance:

  • Life insurance won’t pay out (pays out 98% of claims)
  • People with medical conditions can’t have life insurance
  • Life insurance is expensive
  • Savings can be just as effective as life insurance
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Is life insurance worth it? - iam|INSURED

What is the average cost of life insurance per month?

Based on recent research carried out, the average cost of life insurance is approximately £38 per month and the average level of cover is £152,000. Life insurance premiums also vary dramatically from one insurance provider to another and you can reduce your monthly premiums by shopping around.

Fundamentally, life insurance premiums vary depending on your age, health and the amount of cover that you need, starting from as little as £5 per month. You can also get life insurance to protect your family and your home against financial loss if you die.

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Average cost of life insurance - iam|INSURED

What does life insurance cover you for?

Life insurance is a monthly renewable ‘term insurance’ contract that pays out a cash lump sum or regular payments on death to your family or beneficiaries. Policies are most commonly used for family protection or mortgage protection for your loved ones if you die and your household income reduces, plus the additional issues of losing a parent or carer.

Traditional life insurance will not exclude any pre-existing medical conditions and will cover suicide after 12 or 24 months. You can also use life insurance for business protection purposes as well as tax-efficient business life insurance for directors or key people.

What are the disadvantages of life insurance?

The biggest and most common problem that consumers have with life insurance is the cost and the monthly premiums. This is the top reason for policy cancellations and why more people don’t take out life insurance to protect their family.

Another key disadvantage with life insurance is that it holds no investment value, nor can you cash it in. Life insurance works like any other traditional general insurance policy (e.g. car insurance, house insurance, pet insurance etc.), you pay a monthly premium and it will pay out in the event of a claim. Some people decide to use savings instead of taking out life insurance but you need to make sure that you have sufficient savings to cover the costs of death for your family.

Why do I need life insurance?

The fact is that nobody actually ‘needs’ life insurance, but it is strongly recommended that families and couples have cover to protect their loved ones in the event of death. Martin Lewis recommends life insurance and says “this is something that every parent, partner, or person with any other type of dependent needs to consider”.

Life insurance financially protects your loved ones if you die and pays out a cash lump sum to repay your mortgage, pay for school fees, replace lost income, and pay for regular outgoings. Mortgage life insurance is not linked to your mortgage debt so you can use it to pay off some or all of your mortgage.

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