Life Insurance Brokers vs Quote Comparison Websites

Share:

Facebook Tweet mail
blog post author image
Written by Guest | June 26th, 2019
Our goal here at BestCompany.com is to provide you with the honest, reliable information you need to find companies you can trust.

Guest Post by Colin Simmonds

Why life insurance?

In simple terms, life insurance provides financial protection for your loved ones if you are no longer around to look after them.

As we enter adulthood and our responsibilities grow, the need for life insurance tends to increase.

Theses key milestones in life often trigger us into taking out a life insurance policy:

  • Purchasing our first home
  • Having our first child
  • Getting married
  • Losing a loved one

As we age, the cost of life insurance premiums rises. This is because as we get older, statistically we pose more of a risk to the insurer.

As a result, the best time to take out a policy is often when we think we least need it, (before all of the above scenarios).

Some key figures to emphasise the importance of life cover:

United Kingdom

  • £121,687 - Average mortgage debt[1]
  • £231,713 - Average cost of raising a child to 21 years [2]
  • £223.36 - Average cost of fulltime childcare per week[3]
  • £9,204 - Average cost of dying, (funeral service and all associated costs)[4]

United States

  • $201,811 - Average mortgage debt[5]
  • $233,610 - Average cost of raising a child to 17 years[6]
  • $211 day-care center, $195 family care center, $580 a nanny - Average cost of full-time childcare per week[7]
  • $7,360 - Average cost of a funeral with viewing and burial[8]
  • $52,458 - Average adult debt[9]

These figures are not intended to scare you, but merely to show how financially vulnerable many of us are.

What you may not know is that the cost of premiums can differ significantly between insurers because providers employ different underwriting processes.

It is imperative that you compare multiple quotes in order to secure the most cost-effective policy.

Here are three of the best ways to compare quotes:

  • Research online yourself
  • Use a life insurance broker
  • Use a comparison website

Doing the research yourself online and running through quotes from the various insurers is not a bad option, especially if you understand the pros and cons of the different policy types and exactly what it is you want to protect and for how long.

However, this method can be very time-consuming and somewhat frustrating. In this article we will be focusing on the choice between using a broker or using a comparison website.

Life insurance brokers

A broker works on your behalf, identifying the best available quotes based on the information you provide.

They can also help answer any questions you may have so you are well equipped to make an informed decision.

Pros

  • Brokers can explain insurance jargon

One major advantage of using brokers, especially if you are new to life insurance, is that they can impart their industry knowledge to you.

Understanding insurance jargon is important if you are to choose the policy that best suits your unique needs.

  • Brokers have experience in the industry

A credible broker will be able to utilize their experience to ensure all aspects of your life are protected.

For example, you may think you know exactly how much cover you require. However, having spoked to an agent they may have opened your eyes to other aspects of your life which may need to be covered, which you had not factored in. This may also impact the term length of your policy too.

  • Brokers offer customer support services

As well as ensuring you take out the most suitable policy, some brokers offer additional customer services not provided by a comparison website.

For example, they may be able to help your loved ones through the claims process or help you write your policy in trust.

If you are not a standard applicant (perhaps you have a pre-existing medical condition), a broker can source quotes from smaller, specialist insurers. 

Again, a comparison website will not be able to offer this added value.

If you are happy to proceed with the application, a broker can fill in the documentation on your behalf, saving you time.

  • You can choose between an advised or non-advised brokerage

Depending on your preference, you can choose between an advised or a non-advised brokerage.

An advised broker will listen to your individual circumstances; age, number of dependants, budget, level of debt, etc. and personally advise you on a particular policy. 

A non-advised broker will not personally advise you. They will simply take the information you provide and make suggestions as to viable options. You can still utilize their knowledge to answer any questions.

  • You have a wider panel of insurers to choose from

Some comparison websites do not use a wide panel of insurers in their results. Certain providers simply do not want to used by comparison sites.

A broker, generally speaking, will have access to a wider range of insurers, meaning you have greater choice.

Cons

  • Brokers usually charge a fee

Some brokers, usually advised brokers, will charge a relatively small fee for their services, while a comparison website is free to use.

  • Brokers are only available during business hours

You will only be able to speak with brokers and compare quotes during their working hours, unlike a comparison site which is available 24/7.

What’s more, if you work standard hours, speaking on the phone with a broker may not be convenient.

Comparison websites

A comparison website allows you to input your sum assured, term length, age, smoking status, etc. and will give results based on this criteria.

You can then easily compare the different quotes and make a judgement on the right policy for you. 

Pros

  • Comparison websites are convenient

In 2019, the vast majority of us have access to the internet, be it from our mobile, tablet of desktop device.

As a result, comparison websites are highly convenient. You can compare life insurance quotes 24 hours a day, 7 days a week. 

  • Websites are free of charge

Whilst some brokers charge a small fee for their services, comparison sites are free to use. 

  • No need to talk to anyone

While some people enjoy discussing their requirements with an agent, others would rather not.

Comparison sites enable you to compare multiple quotes at any time of day or night without the need to talk to anyone.

  • Websites may offer a free gift incentive

Some comparison websites offer a free gift incentive for taking out cover through them, usually in the form of a gift voucher for Amazon or other well-known retailers.

While this is a nice gesture, the most important thing is always to ensure that you secure the right policy type, for the right cover amount, over the right term.

Over the course of the entire policy term, a $50 voucher is insignificant. 

The bottom line

The right answer will depend on you and your needs.

If you are not 100 percent sure about the type of life insurance you need to protect the financial future of your loved ones, then a broker may be more suitable.

However, the single most important thing, especially if you have children and/or a mortgage, is to ensure that you have life insurance in place.

Because life insurance is not compulsory, many people put it off for another day. 

Unfortunately, you never know when your loved ones may require the funds generated from a policy.

Whichever comparison method you chose, why not seize the day, safeguard the future and get on with enjoying life — safe in the knowledge your family is secure. 

Notes

[1] https://themoneycharity.org.uk/money-statistics/51592/

[2] https://themoneycharity.org.uk/money-statistics/september-2017/

[3] https://www.moneyadviceservice.org.uk/en/articles/childcare-costs

[4] https://www.sunlife.co.uk/siteassets/documents/cost-of-dying/cost-of-dying-report-2018.pdf

[5] https://www.experian.com/blogs/ask-experian/how-much-americans-owe-on-their-mortgages-in-every-state/

[6] https://www.thestreet.com/personal-finance/cost-to-raise-child-14814957

[7] https://www.care.com/c/stories/2423/how-much-does-child-care-cost/

[8] http://www.nfda.org/news/statistics

[9] https://www.gobankingrates.com/net-worth/debt/how-much-debt-does-the-average-american-have/

Colin Simmonds is the Marketing Director at Reassured Ltd, the UK's largest FCA registered life insurance broker. He has worked within the insurance sector for 12 years, fulfilling a range of marketing roles. Today, he is considered one of the country’s leading figures in digital lead generation. As a dedicated husband and father, he understands the importance of life insurance protection to secure the future of his family.

The Top Life Insurance Companies

company logo
#1 Bestow chevron_right
9.3 Overall Score
5
starstarstarstarstar
(11)
company logo
#2 Quotacy chevron_right
8.7 Overall Score
4.9
starstarstarstarstar_half
(32)
company logo
#3 Northwestern Mutual chevron_right
7.5 Overall Score
4
starstarstarstarstar_border
(29)

Related Articles

Card image cap
Life Insurance and Retirement Planning

Guest Post by Schimri Yoyo If you had a penny and I offered to trade you a ten-dollar bill for that penny, would you acc...

Read More
Card image cap
5 Questions to Ask about Living Benefits

Life insurance has lots of options. Once you decide the kind of policy you want, you can explore what riders, or additi...

Read More
Card image cap
(2019 Review) Quotacy vs. Policygenius: Which Is Better?

Independent life insurance agencies or brokers are advantageous because they allow shoppers to find and compare life ins...

Read More