Dec. 15--Customers taking out life insurance could end up paying 50 per cent more than they need to just by buying it from the wrong place.
Buying life cover _ which pays out a lump sum if you die _ from a bank or direct from an insurer could cost you much more than exactly the same policy from an independent financial adviser, comparison website or supermarket, according to discount broker Cavendish Online.
This is because, while the 'factory-gate' price for life cover is the same, companies selling it can add commission and costs.
Ian Williams, managing director of insurance broker Cavendish Online, says: 'Banks are the most expensive _typically charging 30 per cent more for exactly the same life cover _ and sometimes as much as 50 per cent.'
Ian adds: 'And close behind is going direct to an insurer. This is because they tend to keep the full commission on their policies.'
Discount brokers, high street supermarkets and comparison websites such as Moneysupermarket and Payingtoomuch are typically cheaper.
Using an independent financial adviser costs more but you do get advice on choosing the right policy _ something unlikely to be on offer from most supermarkets or comparison websites.
Independent protection insurance specialist Kevin Carr says: 'A chocolate bar doesn't cost the same in every shop or supermarket and insurance isn't any different.'
Anyone who has to pay more for life cover _ including older policyholders, those with a health problem or a 'bad habit' such as smoking _ are likely to see the biggest difference between the cheapest and most expensive quotes. This is because the higher the premium, the bigger impact commission will have, as it is often charged as a fixed percentage.
On a policy for a 25-year-old non-smoker, the difference will be about pounds sterling 3 a month, but for a 55-year-old smoker it can be nearly pounds sterling 30.
For example, a 55-year-old smoker taking out pounds sterling 100,000 worth of level-term insurance cover for ten years would pay pounds sterling 38 a month for a policy from Aviva if bought via Cavendish Online's non-advice service. The broker does not charge commission but instead takes a one-off fee of pounds sterling 35 per application.
But the same Aviva policy bought via Barclays would cost pounds sterling 65 a month. So someone buying the policy from Barclays instead of Cavendish Online would pay an extra pounds sterling 3,256 over ten years.
And going directly to Aviva would cost pounds sterling 55 a month _ adding pounds sterling 2,040 to the price over the policy term.
Meanwhile, the same policy would cost pounds sterling 47 a month if bought via comparison websites Moneysupermarket or Confused.
If you are buying life insurance for the first time, it's best to get a number of quotes from various sources, including comparison websites. Experts also advise customers to be bold and haggle to get a better deal.
Williams says: 'The fact is that you can bargain, in particular if you buy life cover via an independent financial adviser or price comparison site. If you question the price they will start negotiating with you.'
But he warns: 'It will not happen by default so if you don't ask you won't get a cheaper price.'
If you already have a policy in place, but think you are paying over the odds it can also be worth seeing if you can get a cheaper deal.
But experts advise caution. This is because a new policy may not work out cheaper because the older you are the more expensive the premium. Any change in health could also put up the price.
Tom Baigrie, chief executive of protection adviser LifeSearch, says: 'It is always worth seeing if you can get a better policy but be careful not to cancel any existing cover before the new cover has started, especially if there have been any changes in your health.
'Once you cancel the old policy you might not be able to get it back and the new insurer may change the quoted price based on your personal circumstances.'