Direct Life Insurance vs Personal Insurance Advice

Universal Life Insurance Company
Universal Life Insurance Company (Photo credit: Thomas Hawk)

Often you can’t get through a commercial break on TV without seeing an ad for life insurance. As a basic no frills, low cost service there is no doubt direct insurers have a place. You need to know what it is you are buying though – exactly what is covered and what isn’t.

A lot of people ask why they should get advice when they can buy insurance cheaply with less hassle. Well how often is your decision to buy something based on price alone? I’d suggest – not often when it comes to important purchases. The quality of the product/service is also important but the value you receive is a key factor.

Stewart Bell from Elixir Consulting compiled some research for Zurich Australia (read it here) on the value of getting risk insurance advice. They key benefits of advice were found to include:

  • Field underwriting – the policy is underwritten (accepted and approved) at the time of application rather than the time of claim
  • Expectation management – the advisers guides the process of what is required in terms of personal information, medicals etc and makes sure it happens
  • Suitability – knowing the right type and level of cover required depending on life stage
  • Structuring – whether to hold cover inside or outside super, own vs any occupation, tax implications
  • Access to other professionals – complex advice may require access to specialist tax or legal advice and adviser’s have a network they can rely on
  • Personal skills – unemotional advice as to the best outcome for the client with what can be difficult possibilities to discuss
  • Estate planning – discussing the impact of wealth passing to younger generations is an important factor – making sure the money goes to the right people at the right time
  • Education – a trusted source of information
  • Niche advice – often advisers have a specialty such as business owner’s, medical professionals or mining industry
  • Someone to speak to – arguably the most important is having an adviser you can call if something goes wrong or there is a possible claim

I’d add to the list the knowledge that if something ever happens all the dreams and aspirations you have are still achievable.

Life insurance is like a seatbelt – you wear it but don’t really think you’ll ever need it.

5 comments

  1. David, this is a very valid comment. We seem to be inundated with “cheap” products that offer the world – and not only in insurance!. It is almost certain that when there is a need to actually realise on the deal, there will be tears.
    Problems associated with this type of purchasing are worse than not having a policy on which a claim can be made.

    1. You’re right because often there will be a belief that cover is adequate and when it comes to the crunch the policy turns out to be something different.
      Price is what you pay and value is what you get!

  2. In my situation I also found that going direct was more expensive. I guess you can’t always assume that cover will be cheaper by doing it yourself and the value of having someone there to help if something does go wrong is, as MasterCard would say . . . .priceless!!

    1. Great point Tammy! I think there is a general assumption that direct is cheaper but it’s not always the case.

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