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What Does A Life Insurance Broker Do And Do I Need One?

Elaine Brookes Steve Case

Author: Steve Case - Insurance Expert

Reviewed & Fact Checked By: Elaine Brookes

Updated: 16th December 2023

What is a Life Insurance Broker

Life insurance is a product offered by insurance firms to individuals needing security for their loved ones, whether it’s nearing the end of life or simply as peace of mind for new parents or family.

Anyone can talk to an insurance firm and ask for a quote. So, what is a life insurance broker, what does a life insurance broker do, and are they necessary? Should you look for one or seek out quotes directly?

What is a Life Insurance Broker?

The simple definition is that a life insurance broker is someone who you, as a consumer, work with to gather quotes from life insurance providers, evaluate the pros, cons, and contact details of each, and recommend the best option for you based on your circumstances.

As with everything in life, though, nothing is ever that simple.

For one thing, there are two broad categories of life insurance brokers. These are the advised and the non-advised brokers.

The Role of an Insurance Broker

Non-advised brokers are the most straightforward kind of broker. Non-advised brokers will gather your personal details and go through their contacts at various life insurance providers, gathering quotes for you on your behalf. They will then compile the various offers you get and present them to you.

What they don’t do is give you their opinions on what policies would be best for you, what firms are likely to work with you the most, or which quote best suits your needs.

They talk to you and gather your information; they talk about your goals and needs and solicit quotes from insurance firms on your behalf, but they do not give you their recommendations. They’re much more like assisted applications.

Advised life insurance brokers, by contrast, are generally much more qualified to analyse your specific situation, gather more targeted quotes that they know are likely to be better for you (and ignore the options they know from experience aren’t going to be worth it), and give you specific recommendations.

Where a non-advised broker might give you 15 options to pick through, an advised broker will give you a smaller, more targeted selection, with specific reasons why they’ve chosen those quotes for you.

Both groups of brokers will generally assist in filling out applications and can help non-standard or impaired applicants who might not be able to go through the process on their own.

Some may also have services to help with things like putting your life insurance in trust rather than to a direct beneficiary for the potential tax benefits.

Fees and Commissions in Insurance Brokerage

Insurance brokers need to get paid, just like anyone else. However, when you use a non-advised life insurance broker, there’s generally no fee for the service. Advised brokers charge fees, but those fees are usually not significant. So, what’s going on?

It is, essentially, an affiliate or referral relationship. Insurance brokers have standing deals with insurance companies; if they get a quote on your behalf and you sign up, the broker earns a commission on the sale of the policy.

This may be a flat fee, or it may be a percentage of the value of the policy. Non-advised brokers are paid solely through these commissions. 

Fees and Commissions

Advised brokers add to the equation. Their expert advice isn’t solicited by or even asked for by the insurance firms, but they offer it anyway to make sure you get the best coverage for your personal situation.

The fee you pay them is for that expertise. They still get a commission on the sale of policies, which is why the fees aren’t usually that significant.

This does bring up a common concern:

“If brokers are paid by commission, aren’t they incentivised to recommend the most expensive cover instead of the cover best suited to your needs?”

Usually, the answer would be yes. However, insurance brokers in the UK are regulated by the UK’s Financial Conduct Authority or FCA.

This regulatory body audits and regulates the conduct of the financial industry and the firms operating within the UK and ensures that those firms are operating honestly, ethically, and fairly

And, of course, you always have the option to solicit quotes from insurance firms yourself; a broker is never required for the transaction.

In fact, many insurance providers offer additional gifts to those who book since they don’t need to pay a commission to a broker. Firms are incentivised not to give brokers better deals and instead gain your business directly.

That said, there are advantages to using a life insurance broker to find cover to meet your needs.

What Are the Advantages of Using a Life Insurance Broker?

There are several specific advantages to using a life insurance broker to find coverage. Let’s talk about them.

Saving Money on Premiums

One of the most important benefits a life insurance broker can provide is finding quotes from firms and providers you might not know existed and optimising the quotes you get based on the information they give the provider.

A broker will never lie, omit important information, or otherwise commit fraud to get you a better deal – since that will jeopardise your policy paying out and put them in hot water with the FCA – but they know how to frame and massage information to get slightly better quotes out of the firms they’re familiar with.

Saving Money

This can save you money on your premiums and/or result in better offers with better death benefits for your beneficiaries. 

Life insurance is generally inexpensive, but that doesn’t mean the costs don’t add up. Since a policy might last 40 years – or even more, if you’re buying whole life cover early enough in life – even a savings of a few pounds per month can add up to a lot over that period.

Saving Time on Applications

Time is precious, and doubly so if you’re old enough to be concerned about life insurance (though, of course, anyone can benefit from having life insurance coverage; see our guide here).

How much time do you want to be spending on finding life insurance coverage?

Consider the process. You need to identify a life insurance firm. Then, you need to evaluate that firm to determine if they’re legitimate, if they have a decent reputation, if they’re decent quality, and if you trust them.

Then, you find their application process. Maybe it’s easy and online, a lengthy and complex form that takes an hour to go through, or you have to request a paper application be sent to you.

Saving Time

You fill it out, submit it, and wait for a quote. Then, anywhere from minutes to days later, you get that quote.

Now, you need to evaluate the quote. Read through the contract, find all the relevant information in the legalese, and understand the implications it may have on decision-making decades in the future. 

All of that is for one quote. Then, you must repeat it with every insurance firm you know of and are considering. Hours, days, and weeks of your life are spent, and you don’t even have cover yet.

What happens if you make a mistake on an application? What happens if you don’t know a term or how your statements will be applied? What happens if you misinterpret a line in a quote or aren’t sure what’s good and what isn’t?

As often as not, you’ll either settle for mid-tier cover that does you no favours, or you’ll be swayed by a charismatic salesperson rather than the benefits of the plan, or you’ll shake your head and back off and never bother to get life insurance cover at all.

Meanwhile, a broker can dramatically streamline the process. They can have you fill out one simple form, collate and send that information to dozens of the leading life insurance providers in the UK, and have a whole range of quotes ready for you in minutes. What’s not to love?

Advised brokers can then evaluate them on your behalf, discuss the pros and cons of the best offers, and help you pick the ideal provider, all in under an hour.

Assurance Everything is In Order

Applying for life insurance coverage on your own can be a daunting and complex task, and since it can have decades-long repercussions, including effects on your family, it’s critical that you get it right.

That makes it a very stressful proposition. There’s a lot of burden to ensure you understand everything in front of you.

Insurance is Everything

Insurance brokers are experts in the field. Non-advise brokers, at minimum, are guaranteed to make sure they have every detail of your application correct so the policies you’re offered are all valid and accurate. There’s no chance of accidental fraud or other problems.

Advised brokers can also ask keen questions, gather helpful feedback from you, and learn your goals and how life insurance cover fits into them.

This makes the process much less stressful and completely free of errors.

Life insurance payouts require validation of the circumstances surrounding the purchase of the cover, and misrepresentation of the client on the application is one of the main reasons why a payout may be denied. You avoid this entirely by working with a broker.

Explanations and Information

Some people want to press a few buttons, fill out a form, accept a quote, and move on with their lives.

Others want to know the ins and outs of the scenario, understand how life insurance works, what all the terminology and jargon mean, how it all fits together, and what each clause in a contract means.

What is term versus whole life cover? What’s a level term, and how does it differ from a decreasing term? What is life assurance as opposed to life insurance? What’s important, and what isn’t?

Explainations and Information

For those latter people, it can take months of reading and learning to fully understand how the life insurance system works and how legal terminology works within contracts. Or, they can simply talk to a life insurance broker.

Brokers of both types are fully aware of what this means and can explain everything from simple terminology to the details of the contracts. It’s excellent for understanding and peace of mind.

Someone in Your Court

At the end of the day, the most important benefit of working with an insurance broker is that they’re working for you and with your own best interests at heart.

When you’re soliciting quotes from insurance firms on your own and talking to their sales reps, those are people working for the firm. They’re incentivised to offer you cover they know is best for them, not for you.

Insurance Hero

The value of having someone who knows the system on both the technical and mathematical level and the social and personal level is incredible.

And, given how small the typical fees are for working with advised life insurance brokers – and how there aren’t fees for non-advised brokers in general – the value proposition is immense.

Getting Life Insurance Cover with Insurance Hero

At Insurance Hero, we’re a one-stop shop for quotes from the best life insurance firms all across the UK. Young or old, healthy or ailing, standard or non-standard, term or whole; whatever kind of life insurance cover you’re looking for, whoever you are, we can help.

We aren’t brokers; we’re an independent site that helps you find the best brokers and quotes so you can pick the firm and the broker and work together to get the best cover for your situation.

There’s no financial incentive to recommend specific brokers or firms over others; all we want to do is help you get the cover you deserve.

To get started, you only need to fill out our form. You’ll immediately be given a variety of quotes and offers from brokers and firms, and you can scan through their comparisons to find the ones most likely to work for you.

It’s as simple as that! So get started today and secure tomorrow for your loved ones.