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Life insurance customers don’t want to pay for advice

20 April 2012

Almost half of life insurance customers do not want to pay for advice on a policy, a report by Ernst & Young has revealed.

Taking out a life insurance policy can seem like a big commitment, but many policies come with a low monthly cost. You can compare life insurance with Money Expert.

Research carried out by Ernst & Young found that 45% of people looking for a life insurance policy do not want to pay for advice, despite many policies being fairly complex.

“The survey points to a dilemma for customers,” Ernst & Young said in the report, which surveyed 1,000 life and pensions customers in the UK.

“They want to take control over the buying process, and don't want to have to rely on someone 'selling' to them, and yet they feel they have to use an adviser because of the complexity of the purchase.”

The news comes as changes to life insurance advice, the biggest for years, are due to come into effect at the end of this year.

As part of the Retail Distribution Review (RDR), customers will be offered a clear and concise charging system for any advice they receive.

When the changes come into effect, on 31 December this year, advisors will have to explicitly disclose their fees to clients.

They will also have to separately charge clients for their services, rather than take a commission from a customer’s policy.

It was found that 18% of life and pensions customers would prefer to pay for advice through charges deducted from their policy, rather than an upfront fee. Only 12% would prefer to pay for advice through an upfront or ongoing fee.

Ernst & Young has said the dilemma faced by customers in regards to paying for necessary advice upfront, “is likely to be compounded by the RDR.”

You can compare life insurance policies with Money Expert.

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