From the end of the Second World War, the vast majority of life assurance policies were purchased from the ‘Insurance Man’, on his annual visit to the family home. As the children grew up and moved to their own homes, the insurance man, or woman, (or should it be ‘person’?) often followed and the (bi)cycle continued.
In the late nineteen eighties, rules and regulations were introduced to ensure the general public were being advised on the best policy to suit their own circumstances and not those of the life assurance sales person or the insurance company.
Since that time, the regulation of the activities of life assurance distributors has changed the landscape considerably. A lot of companies ceased to exist or were swallowed up by other firms. Millions of policyholders were surprised to find that the insurance person had stopped calling and they had been replaced by a letter once a year from their life assurance company. Often, the letter informed the policyholder of the company’s new (or latest!) name.
A number of the insurance persons embraced the new standards of professionalism that this legislation would introduce. They studied hard and passed the relevant qualifications set by the Chartered Insurance Institute. The new breed promoted themselves as Independent Financial Advisers or Mortgage Brokers and purported to deliver a much improved level of service and advice to their clients. Newer disciplines such as Equity Release Specialists have appeared over the last few years. However, this higher standard of advice came with additional fees attached. Many advisers chose to work only with clients requiring investment advice as it was a far more productive use of their time from their point of view.
So how does the average person obtain life assurance or mortgage protection without the disproportionate cost of ‘advice’? The last few years have seen an explosion in the volume of business being transacted via the internet. There are numerous sources that allow the consumer to obtain a life assurance quote or even purchase life insurance over the internet without taking advice. Let’s face it, if you know how much life cover you need and how long you need it for then after that it just comes down to price doesn’t it? If only it were that simple! There are still an awful lot of considerations that need to be taken into account. For example, guaranteed rates or reviewable rates? Put the insurance policy into trust or not? Should I insure myself or should my partner insure me? Joint lives or single life assurance? Waiver of contribution? The list goes on and on. The fact is that cost is just one of the factors involved and paying extra for financial advice may be a worthwhile investment. This is particularly true for Keyman Insurance where the taxation implications must be considered. Alternatively, read the series of articles I will publish over the next few weeks and it will start to become clearer. |
