It's life assurance, but not as we know it. It's direct

Sales operators have discovered the meaning of life, says Clifford German

Last month it was Richard Branson's Virgin Direct. This month it is Bournemouth-based Zurich Municipal, which specialises in direct sales to public sector employees. Shortly it will be Prospero Direct up in Lancaster. Direct Line, the grand-daddy of direct sales operations, has been selling it to existing customers since last year and expects to go national within a few months. Traditional insurers like Sun Life are also doing it.

What started as a trickle will soon become a flood of direct sales operations which cut their teeth on motor and household insurance and as competition gets tougher in those markets they have decided that the time is ripe to start selling life insurance over the phone as well.

According to Barrie Wells, Prospero Direct's founder and managing director, about 6 per cent of life assurance is already being sold over the phone. By the year 2000 it will be pushing 20 per cent.

The cheapest life product is term assurance, which pays a guaranteed sum if and only if the policy-holder dies during a set period of years. Direct Line also offers disability insurance, and mortgage protection insurance linked to a repayment mortgage which pays out a decreasing amount over time.

At most, enquiries usually cost only the price of a local call, regardless of where the customer is calling from. Some providers offer free calls. Most providers will offer a quote over the phone and will offer the under- fifties up to pounds 100,000 worth of cover without a medical examination. Customers are offered a choice of advice or an execution-only service for individuals who know what they want and are just looking for a quote.

Direct Line offers callers who sound as if they need advice a 40 minute fact-find to establish what sort of policy is required. It expected 60 per cent of its callers would want advice and has found that in fact 70 per cent just want to know how much it will cost them. It is possible that customers contact a conventional life assurance company for advice, and once they know what they want, they shop around the direct sales companies whose operating costs and premiums are correspondingly lower.

Most callers are happy to find that premiums are much less than they expected. Zurich Municipal tested the market to find that people overestimated term-assurance costs on average sixfold. A 30-year-old can buy pounds 50,000 worth of cover for as little as pounds 6 a month. Some customers may even find that it is cheaper to abandon their existing policies and switch to a telephone-based provider in spite of the fact that new premiums will be higher than they were when the policy-holder was younger.

But price should not be the only criterion. Premium-shoppers should be absolutely sure whether the quote they are given is guaranteed for life, or whether it is subject to a periodic review; the latter policy will usually be the cheapest now but will inevitably get dearer as the policyholder gets older.

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at

Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Recruitment Genius: Digital Optimisation Executive - Marketing

    £30000 - £35000 per annum: Recruitment Genius: The UK's fastest growing, multi...

    Recruitment Genius: Financial Reporting Manager

    £70000 - £90000 per annum: Recruitment Genius: A Financial Reporting Manager i...

    Recruitment Genius: Payments Operations Assistant

    £23000 - £25000 per annum: Recruitment Genius: They win lots of awards for the...

    Recruitment Genius: Telephone Debt Negotiator

    £13500 - £20000 per annum: Recruitment Genius: This nationwide enforcement com...

    Day In a Page

    Sepp Blatter resignation: The beginning of Fifa's long road to reform?

    Does Blatter's departure mean Fifa will automatically clean up its act?

    Don't bet on it, says Tom Peck
    Charles Kennedy: The baby of the House who grew into a Lib Dem giant

    The baby of the House who grew into a Lib Dem giant

    Charles Kennedy was consistently a man of the centre-left, dedicated to social justice, but was also a champion of liberty and an opponent of the nanny-state, says Baroness Williams
    Syria civil war: The harrowing testament of a five-year-old victim of this endless conflict

    The harrowing testament of a five-year-old victim of Syria's endless civil war

    Sahar Qanbar lost her mother and brother as civilians and government soldiers fought side by side after being surrounded by brutal Islamist fighters. Robert Fisk visited her
    The future of songwriting: How streaming is changing everything we know about making music

    The future of songwriting

    How streaming is changing everything we know about making music
    William Shemin and Henry Johnson: Jewish and black soldiers receive World War I Medal of Honor amid claims of discrimination

    Recognition at last

    Jewish and black soldiers who fought in WWI finally receive medals after claims of discrimination
    Beating obesity: The new pacemaker which helps over-eaters

    Beating obesity

    The new pacemaker which helps over-eaters
    9 best women's festival waterproofs

    Ready for rain: 9 best women's festival waterproofs

    These are the macs to keep your denim dry and your hair frizz-free(ish)
    Cycling World Hour Record: Nervous Sir Bradley Wiggins ready for pain as he prepares to go distance

    Wiggins worried

    Nervous Sir Bradley ready for pain as he prepares to attempt cycling's World Hour Record
    On your feet! Spending at least two hours a day standing reduces the risk of heart attacks, cancer and diabetes, according to new research

    On your feet!

    Spending half the day standing 'reduces risk of heart attacks and cancer'
    Liverpool close in on Milner signing

    Liverpool close in on Milner signing

    Reds baulk at Christian Benteke £32.5m release clause
    With scores of surgeries closing, what hope is there for the David Cameron's promise of 5,000 more GPs and a 24/7 NHS?

    The big NHS question

    Why are there so few new GPs when so many want to study medicine?
    Big knickers are back: Thongs ain't what they used to be

    Thongs ain't what they used to be

    Big knickers are back
    Thurston Moore interview

    Thurston Moore interview

    On living in London, Sonic Youth and musical memoirs
    In full bloom

    In full bloom

    Floral print womenswear
    From leading man to Elephant Man, Bradley Cooper is terrific

    From leading man to Elephant Man

    Bradley Cooper is terrific