It’s very easy to think that bankers are wan…bad guys. Sure wasn’t it the bank’s fault that the Boom collapsed so badly?
Between massive loans and inflated prices, it was all a bit of a disaster. But we’ve sort of returned to a middle ground where the banks aren’t such bad guys after all.
Or have we?
When it comes to Life Insurance, that’s definitely not the case. Why? Let’s take a look at why buying insurance with a bank will hit you square in the pocket.
If you’re looking for financial advice, your bank may seem like a safe bet. You probably already trust them with your money – unless you’re one of those people who keeps all their cash in a shoebox buried in their shed.
You’ll use your bank to get a mortgage when you join the rat race and buy your first home.
So I understand why your bank makes sense as your choice for Life Insurance (or Income Protection or Mortgage Protection). You potter into your local branch, stand around for a few minutes, talk to someone, and get started on the process.
A lot of the time, the bank will offer you cover. Banks don’t reject Life Insurance very often. You might get a letter of decline or be postponed if you have a pre-existing condition or chronic illness.
Ultimately, the bank will only turn you down if they think the chances of you claiming are too high. The insurers (and banks) want to make money and the best way to do that is by betting on people who will outlive their policy. The safest bet is someone young and healthy, so if you fit that category your policy application will fly through.
If you don’t, it gets more complicated and is determined by underwriters, who calculate your risk.
If you’re turned down by your bank, that doesn’t mean you’re an insurance black zone where nothing can prosper.
You may just need to take your trade elsewhere. Even if you’re accepted by your bank, you should take your trade elsewhere too.
I’ll let you in on a little secret: there are six insurers in Ireland and the banks only work with two of them.
If you do the maths on that, you can see why you’re probably not getting the best deal.
Enter stage left: the broker.
Let’s get this out of the way: I’m a broker. I’m obviously biased but – and this is the big one – I work with all six Irish insurers.
Straight out of the gates, I have a better chance of getting you a good deal. Think of me as a one-stop-shop for insurance.
Which leads nicely round to impartiality. I don’t have any particular biases when it comes to insurers. In fact, if you’ve got a chronic illness, I’m your best bet as I can match you with the insurer who is most sympathetic to your illness.
If you’ve got a chronic illness and you go to a bank for insurance…well, you may get the least sympathetic insurance provider and a letter of decline in the post or you might get hit with a massive loading.
As well as getting you covered at the lowest price, a broker can also advise on the best insurer for each type of cover.
Let’s say you go to a bank: they’ll offer you Mortgage Protection from Irish Life, Serious Illness Cover from Irish Life, Life Insurance from Irish Life, and you guessed it…Income Protection from Irish Life.
Because, as I mentioned, most banks only deal with Irish Life. (Bank of Ireland only deal with Bank of Ireland Life.)
So if you go with your bank, you’re missing out on valuable benefits such as:
I’ll bet the bank didn’t tell you that.
Dealing with an insurance broker means you’ll clearly understand exactly what you’re getting, any risks involved, and what’s actually covered in your policy.
Of course, there’s also the option of going directly to the insurance companies themselves but I guarantee that you’ll get ripped off. Let’s do a little comparison.
Susan is 40. She doesn’t smoke and is in good health. She’d like a 30-year term on €500,000 cover with the option of extending the cover when she’s older without having to answer health questions.
Her quote looks like this:
She’ll probably choose Zurich. If she’d gone to the banks, she’d only be given one option, Irish Life. Susan would pay over €20 more if she bought the cover from AIB, EBS, Ulster Bank, KBC or PTSB because those banks only deal with Irish Life.
It really is that simple.
If you’d like me to guide you safely through the minefield of Life Insurance, complete this questionnaire, and I’ll be right back.
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