Do it yourself or use a broker?

We are obviously aware that purchasing insurance via the internet can be cheaper, but when it comes to the point of claim, it very often turns out to have been the wrong option!

The cost of insurance is important, and you want your costs to be competitive and manageable.  Most people who shop for insurance put all the emphasis on the front end costs – the premiums – and then realise when it’s too late that they have no one to refer to should they need advice later on.

When an Independent Financial Adviser (IFA) gives advice, researches your options and then arranges the right cover for you, you are not just buying insurance, you are buying an ongoing service and the peace of mind that this will bring. You have to start off with the right amount of cover, with the right insurance company and with the knowledge that the company will not refuse to pay out because of something hidden in the small print. You also need to be sure that, if for any reason they fail to deliver, you have an expert to fight your corner and recourse to compensation against the insurance company.

The benefits you will get from dealing with a reputable broker are as follows:-

• Expert, fully independent advice, to ensure that you always have the right amount of cover for the right period of time, using the right policy for you.
• Waiver of premium incorporated in the plan (if required) to ensure that the premiums are covered if you can’t work due to sickness or accident.
• Plan written into trust (where appropriate), to ensure that the right money gets into the right hands at the right time, and that it is free of any inheritance tax.
• Ongoing advice (free of charge) at any time, to ensure that your changing circumstances will always be correctly catered for and that you will always have the correct amount of cover.
• A broker will deal with the insurance companies on your behalf, to ensure that you have correctly completed the application forms and they will help you with any underwriting queries which may arise.
• They ensure that you are provided with comparison tables, illustrations and key features for the policies being recommended, and that all the features and benefits of the plan are explained in detail in a Suitability Letter, which also explains your reasons for taking out the plan.
• They liaise with doctor’s surgeries to ensure that any medicals are carried out promptly and that the medical reports are immediately sent to the insurance companies.
• If the application is declined, deferred or rated, they will send off your health details to a range of other companies to find out if you will be accepted by another insurer.
• In the event of a claim, they will act as your agent and progress the claim with the insurance company to ensure prompt payment is made to the correct beneficiaries (is the policy in trust or not?).
• In the event of a failed claim, they will use their expertise to fight the claim on your behalf and, if necessary, make a complaint to the correct authorities.
• As they will have given you advice, you will be covered by the Financial Services Compensation Scheme (FSCS) and the Financial Ombudsman Service (FOS), in the event of a claim for bad advice or poor service.
• In the case of Matthews IFA Ltd., you will be provided (free of charge) with your own secure website on which will be stored details of all your policies and plans. This site will bring many benefits as to how we will interact with you in order to assist with your financial planning, giving you access to some truly unique tools that will enhance how you access your financial information.

All of these benefits cost money but are included in the premiums you pay, as is the cost of maintaining high levels of professional indemnity insurance for the protection of clients in the event of a claim for negligence.  None of these benefits will be available to you if you deal direct online and, if mistakes are made or the policy fails to pay out, you will be completely on your own.

You might also be interested in the following article that appeared last year in the financial press, and which further underlines the reasons why you should always go through a fully authorised and regulated broker for insurance cover:-

Financial Services Authority to clamp down on price comparison websites!

The FSA has written to firms operating insurance price comparison websites telling them they must play by the rules.

The letter asks firms to think carefully about whether they are introducing, arranging or even giving customers financial advice – and whether they need to reflect that with a change in permissions.

In its letter to the comparison websites, the FSA said consumers may be being misled about the services they are receiving from these sites. It also points out that when it comes to ‘white labelled’ sites, consumers may not know who they are dealing with.

The British Insurance Brokers’ Association (BIBA) welcomed the FSA’s intervention.
BIBA said it first highlighted the issue of consumer detriment from comparison websites in 2008 and said it is delighted that the points it raised have been recognised in the FSA consultation.

BIBA head of corporate affairs, commented: “For the FSA to say that comparison websites are falling short of their regulatory requirements is of great concern and we strongly believe that these recommendations must be implemented by the sites without delay. We think it is particularly important that the FSA has highlighted a concern that we share, where in many cases questions are pre-populated with default answers.”

I hope this explains why you should always deal with a reputable IFA or independent broker, and that the small extra cost involved is far outweighed by the value of the service provided!