Life Insurance "policy fee"

I'm about to renew a life insurance policy and I notice the cost breakdown is:
Life cover: €266.16
Policy fee: €78.00
Government levy: €3.44

Is there any way I can avoid paying a policy fee on life assurance? I'm surprised how much it is and wondering where exactly it's going. Does it go to the broker who sold me the policy? If so, can I buy directly from an insurance company and cut out that cost? (I've just taken out a far more costly Mortgage Protection Insurance so I'm in between two minds about keeping this life insurance policy going.)

Also, while I'm at it, should I be index linking any potential life insurance policy? (this one isn't)

bmwguy

[Deleted User] wrote: »

I'm about to renew a life insurance policy and I notice the cost breakdown is:
Life cover: €266.16
Policy fee: €78.00
Government levy: €3.44

Is there any way I can avoid paying a policy fee on life assurance? I'm surprised how much it is and wondering where exactly it's going. Does it go to the broker who sold me the policy? If so, can I buy directly from an insurance company and cut out that cost? (I've just taken out a far more costly Mortgage Protection Insurance so I'm in between two minds about keeping this life insurance policy going.)

Also, while I'm at it, should I be index linking any potential life insurance policy? (this one isn't)

I hope they are annual charges are they? I don't think it's a broker fee as I bought direct from an insurance company and I have it too. Although what I did to cut down on charges was cancel my mortgage protection and take out a policy which covers my mortgage and my life assurance needs so I only have 1 set of charges. Before that I had a policy fee on both. The new policy ended up much cheaper than going separate and it still.protects everything i want covered but I did shop around with everyone.

Just make sure the policy is suitable to your needs which is what I did. Look at overall cost not one aspect like the policy fee.

Henry Ford III

Deleted User wrote: »

I'm about to renew a life insurance policy and I notice the cost breakdown is:
Life cover: €266.16
Policy fee: €78.00
Government levy: €3.44

Is there any way I can avoid paying a policy fee on life assurance? I'm surprised how much it is and wondering where exactly it's going. Does it go to the broker who sold me the policy? If so, can I buy directly from an insurance company and cut out that cost? (I've just taken out a far more costly Mortgage Protection Insurance so I'm in between two minds about keeping this life insurance policy going.)

Also, while I'm at it, should I be index linking any potential life insurance policy? (this one isn't)

As it's a renewal premium it's not going to the broker. Renewal commission is normally 3%.

bmwguy

bmwguy wrote: »

I hope they are annual charges are they? I don't think it's a broker fee as I bought direct from an insurance company and I have it too. Although what I did to cut down on charges was cancel my mortgage protection and take out a policy which covers my mortgage and my life assurance needs so I only have 1 set of charges. Before that I had a policy fee on both. The new policy ended up much cheaper than going separate and it still.protects everything i want covered but I did shop around with everyone.

Just make sure the policy is suitable to your needs which is what I did. Look at overall cost not one aspect like the policy fee.

Interesting. Yes, it's the annual fee. My Mortgage Protection is with Aviva, who are also coming in cheaper for Life Insurance (but about €40 more expensive than my existing Irish Life policy). If I were to change life insurance companies would I get a lower fee by virtue of having an existing policy with a competitor (in health insurance, for instance, if you have an existing policy you cannot be penalised for moving but if you have no existing policy you are). Is something similar available if one wants to move their life insurance policy?

bmwguy

[Deleted User] wrote: »

Interesting. Yes, it's the annual fee. My Mortgage Protection is with Aviva, who are also coming in cheaper for Life Insurance (but about €40 more expensive than my existing Irish Life policy). If I were to change life insurance companies would I get a lower fee by virtue of having an existing policy with a competitor (in health insurance, for instance, if you have an existing policy you cannot be penalised for moving but if you have no existing policy you are). Is something similar available if one wants to move their life insurance policy?

I don't know to be honest. I know my advisor waived a lot of fees because I have a pension a mortgage and an investment with him already. He made sure i knew about his generosity too he mentioned it a lot! So maybe it's possible for 2 policies I am not sure.

BazzaDP

This is the cost for the company that services your policy.

Most Life Insurance policies are underwritten by huge financial institutions that basically handle the risk of the policy (i.e. will pay out if you die), however only deal in bulk and don't deal with the public.

Other companies are the ones that actually sell you the policy (effectively on behalf of the underwriter) and service it for you. To do this they need to have means for you buying (sales advisors, a website and/or connections with brokers), a customer service department, a claims department, a billing department, printing costs, postage costs... etc. And yes to make a profit too. So this is an annual cost and not just a one off sales commission.

The underwriter doesn't do all this customer facing sales and servicing aspect and just concentrates on what they do best, which is taking the money in (through the intermeadiary company), pooling it together, investing it, paying out any claims (back through the intermeadiary) and also calculating average loss ratios and investment returns to work out whether they need to adjust premiums in future.

This is also why you hear "your insurance is provided/underwriten by XXX. YYY trading as ZZZ is a registered by... etc." on TV and radio ads. XXX is the underwriter, YYY is the legal name of the servicer/intermeadiary and ZZZ is the friendly name (often very similar to the legal name) and is who you bought the insurance off of. Even companies that underwrite themselves will usually have two legal entities (one for the underwriting, one for the servicer) though they might sound very similar.

Hopefully that makes it clear why there are two separate companies involved here - its quite common in insurance and although you might think you are being charged needlessly by there being two companies, there are good reasons for this and there are costs involved to serve your policy.

It is a legal requirement to show these two fees separately though I'm honestly not sure if there's any benefit. Yes it's more transparent and good to know what makes up your premium, but it's not like you're able to decide not to pay off of these fees and it's the overall cost to you that you should care about and use for comparison. Overall I think they just cause more confusion that clarity.

Petey81

I know this is not exactly connected but i cant post a new thread for some reason. I know that legally you have to have mortgage protection for your home but it is not a requirement for an investment property even though many banks still make you have it. Does anyone know which institutions will allow you to take out an investment property mortgage without mortgage protection?

Thanks

Henry Ford III

Petey81 wrote: »

I know this is not exactly connected but i cant post a new thread for some reason. I know that legally you have to have mortgage protection for your home but it is not a requirement for an investment property even though many banks still make you have it. Does anyone know which institutions will allow you to take out an investment property mortgage without mortgage protection?

Thanks

Potentially any or all of them. Depends entirely on the strength of the proposal.

thomasm

Deleted User wrote: »

Interesting. Yes, it's the annual fee. My Mortgage Protection is with Aviva, who are also coming in cheaper for Life Insurance (but about €40 more expensive than my existing Irish Life policy). If I were to change life insurance companies would I get a lower fee by virtue of having an existing policy with a competitor (in health insurance, for instance, if you have an existing policy you cannot be penalised for moving but if you have no existing policy you are). Is something similar available if one wants to move their life insurance policy?

Zurich are running a 15% discount offer on Mortgage Protection for the last year. I would be surprised if anyone can beat them on price. Did your adviser quote them for you.

Henry Ford III

thomasm wrote: »

Zurich are running a 15% discount offer on Mortgage Protection for the last year. I would be surprised if anyone can beat them on price. Did your adviser quote them for you.

They are not always the cheapest.