Ray James has worked in Financial Services for almost
30 years with Insurance Companies and as an Independent Financial Adviser. His qualifications and experience are
now dedicated to introducing clients to specialists that do not charge a fee for arranging Life Insurance
or Mortgages.
Buying insurance through a IFA or on-line comparison website both generate commission
which can amount to hundreds or thousands of pounds of your money, depending on the premium, type of policy
or product and the term. Commission is paid either by a single sum or deduction throughout the life of the
policy.
What's the difference between a comparison website and an independent adviser when buying a product
regulated under the Financial Services Act like life insurance, mortgage protection, income protection, mortgages or
general insurance? Well, both have to be registered with the Financial Services Authority (FSA) but
that is when similarities end. One is protected, the other isn't, despite both getting paid.
Shopping online has
become popular but there is a sting in the tail that is rarely reported. It is called "execution
only" because no advice or recommendation is given. You chose (most likely without knowing) to give up your
right to an FSA regulated sale and use of the Ombudsman Service if your policy is found to be unsuitable or lacking benefits
you would have wanted if someone had told you. You may well create an initial or additional Inheritance Tax liability
for your dependents.
An IFA has to discuss your requirements with you and research the whole market
to find a policy that matches your needs and affordability plus document this research and be able to show the regulator they
have treated you fairly. In the case of Life Insurance they also need to take account of your total worth in case
the sum insured raises a potential liability to Inheritance Tax on your death and take steps to reduce or eliminate the extra
or new liability.
Are you still happy to buy insurance direct or on-line, be charged commission yet
lose rights and possibly create a fund for the taxman?
