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A worrying picture of unsuitable policies being sold at inflated prices has been revealed by undercover shoppers probing life insurance sales. Market research company Consumer Intelligence sent out secret shoppers to investigate sales by middlemen such as brokers and direct sales operations.

Its research reveals that companies claiming to offer advice often failed to ask the right questions to assess appropriate cover. Known as a fact find, the questions should cover salary and mortgage details, existing cover and details of dependants.

Undercover shoppers calling Life Policies Direct, for instance, were not asked about salaries, their existing cover or their dependants. Another company, Lifesearch, itself noted for campaigning against sales of protection policies without advice, failed to ask detailed questions.

The secret shoppers found that different brokers charged different prices for the same life policies, despite claims by most to offer the lowest price. One caller to Lifesearch was quoted £10.95 a month for £150,000 of cover over 20 years while Legal & General Direct quoted £10.23 for the same cover.

Only then did Lifesearch quote a premium of £9.88. Lifesearch and Life Policies-Direct both promise to cut the cost of cover if the same policy can be found cheaper elsewhere. The difference is due to the commission paid to intermediaries.

Most providers failed to disclose commissions. Tesco was the only one consistently to include such details. The Association of British Insurers' code of practice says intermediaries should 'when asked, provide the consumer with details of the commission earned', though it is not a legal requirement.

Jason King of Life Policies Direct insisted that the firm's systems were set up so that 'we cannot produce quotations without asking key questions'.

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