Sometimes being frugal and saving money where possible is the right thing to do. Sometimes it’s the only option available when finances are tight.
But people who are able to make ‘lifestyle’ decisions on the things they buy would never buy the cheapest fridge on offer or the cheapest material for the new kitchen worktop.
Nor would they buy cheap clothes or cheap shoes.
Lifestyle choices are usually made based on preference and quality (and sometimes pride) but not on price.
The saying ‘you get what you pay for’ sums up the concept that if you pay more, you get better quality or better service.
So why do we insist on paying as little as possible for insurance? Why is ‘cheap, cheap, cheap’ being forced down our throats?
Price comparison websites have a lot to answer for when it comes to the shift in popular culture and the belief that cheap insurance is the best option.
After all, price comparison websites pretty much just compare price.
Most of them do give options such as legal cover, courtesy cars, home emergency etc.
But how many have information about the percentage of claims paid, the average time taken for calls to be answered or financial stability of the insurer?
Which? tries to bridge this gap a bit and their table of car insurance Recommended Providers is quite good from a customer satisfaction perspective.
What’s more concerning though is the drive to sell the cheapest life insurance or critical illness cover when it is so easy to end up with cheap cover that doesn’t offer the protection that is needed.
For example, Tesco life insurance (provided by Friends Provident) doesn’t come with ‘Waiver of Premium’ which is usually an optional extra and protects the policy if you can’t work due to sickness. Imagine having a fall or an accident that leaves you disabled and unable to work – it’d handy to be able to keep the life cover and never have to pay another penny for it!
Cavendish Online are championed by MoneySavingExpert but they don’t give any advice with their cheapest option so if you get something wrong and the policy doesn’t pay out there’s no one to blame.
Even Which? can’t offer much in the way of life insurance comparisons in terms of quality and their Best Buys table is out of date and not competitive. I can easily beat their prices so they’re information is not to be trusted and shouldn’t be portrayed as ‘Best’.
Cheap is definitely not the right way to go when it comes to buying critical illness insurance or income protection. People need to know what the difference between an ‘Own Occupation’ and ‘Any Occupation’ Total Permanent Disability definition actually means and that’s just scratching the surface when it comes to all the nuances available.
It’s a shame that consumers are being driven towards cheap low cost options as opposed to good quality service.
You wouldn’t hear BMW or Mercedes shouting about having the cheapest 4 door saloon in the market and M&S don’t position themselves in the budget shopping arena, yet they all still get plenty of customers.