Lies, damned lies and direct insurance!
There seems to be a big drive by the direct life insurers at the moment with vast amounts of money being spent on some very expensive prime time television advertising…Outsurance Life is the latest culprit. The direct insurers may differ slightly but their big claims are all the same…”cut out the middleman”, “no broker, no commission”. The (not so hidden) message is that using a broker is expensive and therefore if you go direct you are going to save because you have got rid of this (unnecessary) expense.
As I have written many times before, go direct by all means, but don’t be naïve about it. Someone (that would be you) is paying for all the expensive advertising and infrastructure. If you are cynical about using a broker then do yourself a favour and get a quote from one of the direct insurers and then get a comparative “commission-free” quote from one of the “traditional” insurance companies. My experience has shown that the direct insurers are even more expensive than full-commission quotes and when we remove the commission from the quote, then they are stupidly more expensive. So much for saving by going direct and cutting out the middleman.
One of the direct insurers even offers a 30-day money back guarantee if you can find a cheaper premium on the same cover. Well here is a news-flash for them. I did a quote on their system and they can offer me R1million for R178 per month. A comparative commission free quote through a traditional insurer for the same cover is R1million is R150 per month (that’s almost 19% more). Interestingly, they have also increased the cost of their cover since I first did a quote. Guess I wont be using them then…