Exposed - The Tricks Of
    The Life Insurance
     Comparison Sites
 
    Ray Black, Founder of Money-Minder
Comparison sites are supposed to make buying financial products on the web transparent and hassle free. But when it comes to comparing life insurance choosing the wrong comparison service can lead to quite the opposite. With the Office of Fair Trading investigating price comparison sites in 2010, www.money-minder.com exposes the tricks of the life insurance comparison trade which could leave consumers feeling well and truly hoodwinked and offers tips on how to avoid them.

The ‘Non’ line quote
One of the most attractive aspects of using the internet to compare financial products is the space it puts between you and a pushy salesman. However, frequently websites which 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.

Money-minder tip – Ray Black, Managing Director of Money Minder Financial Services and creator of www.money-minder.com says “If you’re not completely certain that all you’re going to get is the comprehensive online comparison you’re 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.”

Selling life insurance or selling leads?
"You enter the comparison site, and within a few minutes your phone is ringing and somebody is trying to flog you something you don't want - and that's not acceptable." – So said Lord Lipsey, former Chair of the Financial Services Advisor Panel, just one year ago. Has anything changed since then?

Sadly the answer is no. 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 £40.00 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 ‘for further information’.

The harvesting and selling of a customer’s information has several implications for the customer:

1. A customer comparing life insurance quotes with a well known 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.

2. 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 the customer buys something from them often calling frequently over several weeks until they get a sale or give up. 

3. 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. 


Money-minder tip – Ray Black says “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.

“If you don’t know what cover you need or how long you need it for, use a free online tool like www.money-minder.com’s interactive finance navigator to assess your life insurance needs and to review the pros and cons of the different types of life assurance plan available. If you’re still not sure, first decide if you’d like to get some advice over the phone, or if you’d prefer to see an adviser face to face, and then use an online broker that is very transparent about how much the cost of that advice will affect your premiums.”

The cost of ‘Free’ advice
Some comparison sites suggest that they offer ‘Free’ telephone advice when buying life insurance and protection products and this will appeal to many customers. However, although customers may not be charged a separate fee for receiving advice their monthly premiums will almost certainly be higher than someone who has chosen not to get advice. 

Money-Minder’s comparison results page shows customers the four possible monthly premiums they could potentially pay depending on how they choose to buy the policy. The prices will range from the cheapest flat fee option up to the premiums they will pay if they choose face to face advice. Money-minder.com is unique in its ability to give complete clarity of how much the cost of advice can affect the monthly premium.

Money-minder tip – Ray Black says “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!”

Reviewable premiums – cheapest isn’t always best
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.

Some comparison services make this distinction clearer than others. Consumers who do not understand the difference could find their initially cheaper quote becoming significantly more expensive over the term of the policy.

Money-minder tip – Ray Black says “The cheapest quote on one comparison could be for a reviewable premium so make sure you know what you’re looking at. Good comparison services show very clearly which premiums are reviewable and guaranteed and explain the difference. Always make sure that you are comparing like for like.”

Using Money-minder.com customers can compare products from across the market including leading insurers such as Legal & General, LV, Aviva, AXA, Friends Provident, BUPA and Zurich.

·       Simple Steps to        Financial Peace of Mind

It is estimated that over 60% of people experience sleepless nights worrying about their finances but by taking control of your money this year, you can enjoy a good night’s sleep and reap the financial rewards.

Initially, making fundamental changes to your spending habits can be tricky so to motivate you to take action, try rewarding yourself when you save money suggests Peter Marshall, Managing Director of IRS, publishers of The Successful Personal Investing Course (SPI), a valuable guide which teaches how to build long term financial security:

‘An easy change to make is to use cash to make purchases. You’ll be amazed at how much money you’ll save by locking your credit cards in a drawer at home and using cash to pay for everyday items such as food and groceries. It is astonishing how much less leaves your bank account using this method.’
 

When you have some cash spare, put it in a high interest savings account but Peter insists that it is important to reward yourself for your good efforts.
 

‘For every £5 you save, put £1 into a ‘treats kitty’ and use this fund for indulgences such as a new pair of gorgeous shoes or dinner at a fancy restaurant. By putting a share of every pay increase, bonus and windfall into your account, your savings molehill will rapidly become a mountain.’
 

If there’s something specific you’re saving for, Peter recommends saving the full amount before purchasing as he explains:

‘You benefit in two ways by only buying things you’ve saved up for as firstly, you don’t pay any interest on any money owed and secondly, it’s almost always cheaper as prices will always fall or the products will be reduced in a sale.

'Handing over the money you have saved while knowing that you haven’t paid over the odds for something is always going to give you a good feeling.’