What is the difference between a Life Insurance Broker and a Life Insurance Company?

A Life Insurance Company is the organisation which actually writes your policy and covers your risk. It is their name which will appear on your policy and it is their duty to payout if you make a claim. Most Life Companies sell a lot more besides life insurance – for example car insurance, home & contents insurance, pensions and investment funds and bonds.

A Life Insurance Broker is an intermediary who acts between you and the Life Insurance Company. Their role is normally to find you the most suitable Life Insurance Company from which to buy your policy. They will usually consider the cost of the required policy and quality of the Insurance Company’s contract. If they are providing you with advice, they will also conduct what is called a Fact Find which enables them to assess what type of policy, and indeed other financial products, are suitable for you.

On the Internet it is generally not possible to conduct an in depth Fact Find. So most web sites concentrate on providing you with Help and Information to enable you to make your own decisions.

Some Brokers and Supermarkets only deal with one Insurance Company and, in our view, should be avoided as they are unlikely to be able to offer you the cheapest insurance option. Ideally, you need an Insurance Broker who can search the databases of many insurance companies in order to match your requirements at the lowest price.

Once the insurance policy has been chosen, it is the Insurance Broker's duty to process your application.

Most Brokers receive commission from the Insurance Companies although some may charge fees as an alternative. This should not affect the selection of insurance companies or contracts are offered to you. In principle, The Financial Services Authority prefers the concept of fees rather than commission. The problem is that fees attract VAT whereas there is no VAT on commission. So on a like for like basis, fees will work out 17.5% dearer.

Discounting life insurance premiums is a common practice on the Internet. This is due to the high levels of competition on the web coupled with the fact that the Internet is a low cost method of distribution. What happens is that the Broker reduces his commission and passes this over to you in the form of cheaper premiums for the same level of cover.

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This website endeavours to provide general information in relation to various financial products. We hope you find this information useful. In no circumstances should the information we provide be construed as Quote Life Insurance providing you with specific advice in relation to your own circumstances, on the suitability for you personally, of any product or service referred to within this website.