The pitfalls of arranging your own life insurance cover, health insurance, home insurance and motor insurance online or via price comparison websites have been highlighted in new guidelines by the Association of British Insurers (ABI).
Insurers, eager to provide a rapid-response “quick quote”, sometimes fail to ensure that the customer understands the terms of the insurance cover being offered. Customers buying life insurance and other insurances online, rather than with the help of a financial adviser, must currently beware of inadequate information in four key areas:
- Insurance policy information: the key features of the life insurance or health policy may not be clear online
- Which aspects of the insurance policy are “add-ons”: not all features of an insurance policy may come as standard, some may need to be specially requested, at extra cost
- Excess levels (motor cover): voluntary or compulsory excess levels may not be made clear online
- Referrals: where a customer cannot be covered, he should, but may not, be given a clear referral to an alternative provider
Furthermore, online applicants are often not informed of assumptions that the lender makes about them, when compiling their quote, and may be unaware of the exclusions contained in the “small print” of a life insurance policy, a health insurance policy, or home and motor cover.
By buying life insurance through a financial adviser, however, consumers will have the conditions and exclusions of their policy explained to them, so that they are fully aware of what is covered. An adviser will also guide them through the sometimes complex application process, which can be a minefield for the uninitiated. Neglecting to provide a specific, perhaps minor detail of your past health history can be enough to invalidate a future claim.
Furthermore, an independent adviser can take a ‘whole of market’ approach to ensure that he locates the life insurance policy that is right for you.
