Buying insurance online – Is it an expensive mistake?

“1.2.3”, “Chill”, “hello” where to turn?”

I often watch the adverts on TV and wonder why when my son sings the Jingle “12,3.ie just log on and save money”. And the little boy telling us we can save up to €400 per year on our mortgage protection insurance, my wife, who likes to shop online, is not running to the laptop.

My conclusion is I wouldn’t (even if I wasn’t in the industry) buy insurance online. The reason I, and feel many of my peers don’t, is that it is akin to buying an expensive suit or dress online. You know it might cost less but not sure if it is going to fit. The big difference is the outfit might only be for a couple of years, insurance could be for 30 years plus.  You often see in their advertising a focus on getting a rapid quotation.

 

 

 

 

 

 

 

 

 

 

 

 

**Source Chill insurance Advertisement

Importance of impartial advice

Advice has become increasingly more important in our busy lives.  I often wonder how people make their decisions when it comes to insurance and whilst certain insurances are a commodity, such as car insurance. Then there are those insurances, such as life, illness which are as much subjective than they are a necessity.

Case Study

A couple who have basic mortgage  protection insurance, and who borrowed €300k, 5 years ago. Like the rest of us have struggled along for the last few years. Today, they owe €280k with 25 years left. They are paying €28.05 p.m. for reducing mortgage protection insurance.  This policy would pay the remaining balance of the mortgage if either of them were to not live to the term of the mortgage. They now have 2 children and took out insurance online to protect the kids costing a further €40 p.m.

 

 

 

 

 

 

 

 

 

Without getting into the amounts of cover they purchased . (general advice is to insure 5-10 times salary less mortgage payments and the widowers benefit).   When I asked what cover they had? They said they took what they thought was correct and what they could afford.

Whilst I cannot fault them for this, there are a number of things I highlighted to them

1) Did they consider the possibility of combining the mortgage protection and separate insurance into one. As rates had come down and one of them had given up smoking, the plans they had purchased were quite expensive.

2) The insurance they purchased to protect the children was equal for both of them.  The female partner was not working, and whilst I know that homemakers provide a real cost benefit (I have 3 children) the insurance should have been skewered on the male life, as his income was the one they were totally reliant on.

3) Ironically, whilst 1.2.3 and hello offer attractive rates. However, they don’t benefit from the offers that life companies provide some of the bigger brokers.  (for example Zurich are offering brokers €10k cancer only cover for 1 cent per month).

Perfect, just sign here…

I have been in the industry long enough to know that there are a lot of “pushy” brokers.  In my opinion there sole focus is out to get a “sale”.  I feel it gives a lot of very good advisors a bad reputation. Whilst,  I would welcome the fee based structure that has recently been implemented in the UK. I don’t believe the time is right for the Irish Market.  Until then it is true what one of the ads say, it pays to shop around.

 

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