The American author, Garry W. Keller once said that multi-tasking is merely the opportunity to screw up more than one thing at a time. Being a man, I am with Gary on this, however, these days we are all multitasking. This is not just because our lives have become so much busier due to poorer work-life balance; it’s also because technology allows us to do so much more ourselves.
One of the areas that have become most popular due to this is price comparison sites. I think that I can safely say that most of us like a good deal and these sites offer us a perfect opportunity to get it. Couple that with the fact that we see insurance as a forced purchase and you have a strong case to focus on the cheapest quote.
So why does using price comparison site almost always results in a cheaper quote?
Our investigation has brought up some interesting insight from Moneywise:
‘Take life insurance, for example. There are around 10 big life insurers in the UK. They quote monthly premiums for different types of risk, and build in a commission of around 30% to pay for distribution through independent financial advisers, brokers and price comparison sites. This is similar to the recommended retail price of electrical goods on the high street. If you go directly to the insurer you will be charged this full price, whereas a broker or a price comparison site might decide to forego some of the commission in order to offer a better price than their competitors.’
Based on this information I would definitely recommend that you go through a process of comparison and elimination when choosing your insurance policy. However, you need to be aware that research conducted by the FCA found that price comparison sites did not always provide clear and consistent information. According to their finding some key features like levels of cover, exclusions, limitations and policy excesses were not as clearly laid out. It concluded that a focus on price could distract from crucial product features and lead consumers to make an inappropriate policy choice that does not suit their needs and requirements.
So, what would I have you do?
I would recommend that you don’t go directly to an insurer but rather consider the following process:
- Consider what you need your insurance to deliver. For example, how quickly would you need to policy to pay out or what percentage of your income would you like it to cover
- Use this criterion to carry out a search on a number of price comparison sites to get an idea of the cost and saving you can achieve
- Speak to a broker to get a personalised quotation based on your needs and a variety of policies available to you
At Spot on Mortgages, we don’t charge a fee for our advice so get in touch with us if you wanted to speak to us further.