Considering taking out an insurance policy for something important that you're not qualified in?
You may want to think about using an insurance broker or financial advisor. Financial advisors or insurance brokers are experts in the insurance market and they can often find you better cover at a more affordable price.
Comparison sites are quick, however for important things, they're not the canniest way to purchase insurance.
Lots of people go to comparison sites and search for the cheapest insurance, however any insurance expert will tell you it's not the most resourceful way for certain types of insurance products.
Why? If you look closely at the policies on comparison websites, they are cheap, but they're cheap because the features in the policy can be generic. If you want a policy that meets your individual circumstances it may be better to use a financial advisor.
Let’s take a look at the common types of insurance and where you could be better off using a broker or advisor to get you the best policy.
Types of insurance where a comparison site is a great resource
The ‘tick box’ type insurance plans that you buy to cover your back. As long as you’re fully aware of the terms of the policy and have considered your circumstances, then a price comparison website is a simple way of finding the right policy at the best price. Don’t forget, once you’ve found the right policy, you could save a little extra money by buying the policy via a cashback website.
These include:
Travel Insurance
You have two main options when it comes to buying travel insurance – single trip and annual (multi-trip) insurance.
Within each of these, there may be specific types of insurance cover depending on where you’re travelling and your circumstances.
Worldwide Cover
Winter Sports Insurance
Over 65s Cover
Backpackers Cover
Family Cover
Group Cover
Most of us presume nothing will happen to us on holiday, so we just book the cheapest policy available to cover the basics and hope for a smooth vacation.
Comparison sites for travel insurance allow you to easily compare cover for the main things we should protect against:
Delays and Cancellation
Lost Luggage
Theft
Medical Bills (make sure to disclose pre-existing medical conditions)
When comparing prices, just make sure you’re aware of any excess charges…a higher excess on the cheapest policy could cost you more if you do need to make a claim.
When should I get advice from a broker?
If you’ve found a policy but just need something confirming, contact the insurer to be sure.
If you’ve been comparing policies but finding it difficult to find something that covers a specific need, then going to a broker could save you time and hassle.
Things like:
Complex medical needs
Travelling to specific places
Certain activities
Contents insurance
Again, for peace of mind, content insurance protects our home possessions in the event of, well, an unwanted event.
It’s something you’ll hope you never need to make a claim on but still makes common sense to have.
The main thing with contents insurance is estimating the total value of your possessions. With contents insurance, this means all the stuff you could take with you if your house was being knocked down tomorrow.
A couple of things to note:
You’ll usually need to declare any valuable items worth over a certain amount
You won’t be covered for accidental damage unless you buy enhanced protection.
Things that affect the structure of your home come under buildings insurance.
Again, if you’ve got several quotes around the same price, compare the excess.
When should I get advice from a broker?
If you have a specific unique and valuable item – artwork or family heirloom, for example, you may want to speak to a broker or advisor to help you with the bespoke nature of insuring such items.
General rule:
"The more complex your insurance needs, the more help a broker or advisor can be"
Gadget Insurance
You could add specific gadget insurance to your contents insurance, or buy a separate policy for your smartphone or laptop.
Insurance on single products really comes down to how clumsy or forgetful you are! If you have a history of leaving your phone on the bus or dropping it down the loo, you might want to insure it.
These insurance policies may vary in terms of excess costs, but the main aim of the policy is to protect you against loss or damage.
Some premium bank accounts even include mobile phone cover for a monthly fee.
Car Insurance
More than just a tick box, car insurance is required by law. And it’s often the most expensive insurance premium we pay.
There are lots of ways to make the most of price comparison sites to reduce the cost of your car insurance.
While you don’t need a broker to help you, it pays to spend some time doing your research as there are so many variables – some fixed and some you can play about with - when it comes to finding the best price for car insurance.
Essential tip:
Comparison websites won’t all give you the same results, so make sure you ‘compare the comparisons’. Choose 2 or 3 different websites and use exactly the same criteria to find quotes. You may find the same policy cheaper on another website, or find a new product that wasn’t available on the first site you went to.
Types of insurance where a financial advisor could
help you better
Generally, things that have more emotional connection can benefit from personalised advice from a financial advisor or insurance broker.
The need for a bespoke protection plan is greater when you’re emotionally invested. The event you’re insuring for is likely to be painful and stressful, so the last thing you need is extra stress or pain because your insurance policy didn’t cover you for what you thought it did.
Life, Income and Critical Illness protection policies
These types of insurance protect you when life either ends or gets in the way.
You need to be 100% sure you’re getting the right plans for your needs. It’s more than just a tick box to protect you if the worst happens. Comparison websites can’t provide for every individual situation.
With life insurance, your policy may be guaranteed until you die – this is called Whole of Life insurance and provides a lump sum for any loved ones you want to receive it.
Working out how much you want to leave somebody in a payout, and getting the best policy price for that amount, is where a financial advisor can be incredibly useful. The best advisors will look at your lifestyle and circumstances – going beyond simply a ‘find me a policy that pays out £XXX’.
Another thing to consider is tax on a life insurance payout. While in general, a lump sum life insurance payout isn’t taxable, it could end up being subject to inheritance tax depending on how much your entire estate is worth. This is where a financial advisor can also explore your options to mitigate the risk of paying inheritance tax on it.
Other types of insurance like income protection and critical illness will give you a payout if you’re unable to work or get a particular illness.
Talking to a broker or advisor can help you get a better understanding of what you specifically need from a policy like one of these.
Won’t I pay more for the help of a financial advisor or broker?
Most financial advisors won’t charge you a fee. They’ll get commission if a policy goes to business.
The majority of advisors aren’t restricted or contracted by a bank or an insurance company, therefore, they can give you unbiased advice and can normally source you more comprehensive cover, that’s bespoke to you at a better price.
A financial advisor could also look at insurance bundles that may not be easy to find on a comparison website. These policies could cover you for a range of things grouped up into one package that saves you money.
If you do also use a financial advisor, you may get the added value of claims support, if you do need to make a claim.
Summary
The insurance industry has a pretty bad rep and often considered untrustworthy. But as long as you’ve done research, which could involve the help of a broker or financial advisor, an insurance policy should offer the exact level of protection for you.
