Brokers Vs High street banks; so far, so normal…..

We deal with all kinds of cases here at Sure Health and Protect and I wouldn’t be able to write about them all, but this one from last week has really made me think.
A lady got in touch with us, mainly for a second opinion. She was a first-time buyer, clearly worked very hard to save a large deposit and was buying on her own.

So far, so normal.

She had been to her bank (nameless for now, but one of the biggest) to arrange her mortgage as so many people do and to be fair to them, the deal she had taken was pretty good. Certainly would find it’s way into the best 4 or 5 deals on the market, but obviously the bank could only offer their own products.

So far, so normal.

The staff member at the bank then mentioned insurance and explained that they were unable to give the lady any advice and that they could only offer insurance products from one single provider (again nameless, but again one of the biggest). They went on to suggest what I’d consider to be a very old-fashioned solution – basic Life insurance with Critical Illness cover. The cost for this cover was a little over £75 per month for just over £200k cover.

So far, so normal.

The thing that strikes me as strange these days, is that insurance advisers, in the main, continue with old fashioned solutions like this. The fact that this staff member couldn’t offer advice and had only one provider just makes this even more frustrating. For the record, we produced a quote for the same cover, with the same insurer and came up with a price of around £62 per month. Yes, you’ve got it, the bank and the insurer had ‘enhanced’ the premium. No benefit to the client though, so you can guess who would be the winner…

Let’s change the normal.

When looking at an overall solution for our clients we consider them as individuals. A first-time buyer, buying on their own, having worked damn hard to save the deposit, needs a lot more time and attention, rather than assuming a one size fits all model.
In reality, if our new client (of course she signed up with us, not the bank) was unable to work for a long period due to illness or accident, her salary would soon stop, and her ability to pay the mortgage on the property that she’s put such an effort in achieving could be compromised. The policy that the bank had offered wouldn’t necessarily help her, despite it costing a pretty penny.
The alternative solution was to provide an income protection policy, that after 3 months of being unable to work, would pay out £2000 per month for the remainder of her mortgage term (up to 27 years). This would enable her to stay in her own home and not feel rushed into returning to work if she was unable to. Potential benefit to our client is over £600k. We also ensured that a year’s salary was available, tax free, in the event of our client dying or suffering a critical illness, and therefore providing the short-term emergency funds that these situations can benefit from.
A much more appropriate and beneficial option for her and best of all, it came to around £69 per month. Less than the bank and she had benefited from a fully advised approach from an independent specialist who can offer solutions from a huge number of insurers.
Don’t get me wrong, there is absolutely a place for standard life and critical illness cover, but not for everyone. There’s a good chance that you could benefit from a more up to date approach to insurance, so give us a call on 01202 830630, or click here and get in touch.

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