Anyone watching TV recently would be well aware of the increasing number of Life insurance companies promoting direct insurance to consumers.
Increasing the awareness of the need for personal insurance cover is great as most Australians and their families are underinsured. Many people have been misled by the advertisements and believe that insuring direct without advice is easier and cheaper than seeking professional advice.
Most direct insurance policies are easy to purchase over the phone/internet because the benefits provided are often minimal and any pre-existing illness or injury is normally not covered.
The following table highlights the main differences between obtaining cover directly from the Insurance company or via a specialist Life Insurance Adviser.
Life Insurance Direct without Advice
Life Insurance with Advice
|Inexperienced telephone staff||Experienced professional Advisers|
|Pre-existing illnesses not covered||Some existing health problems may be covered|
|Limited cover options available||More comprehensive cover provided|
|Risk of Underinsurance||Advice to fully protect you and your family|
|No help at claim time when needed most||Your Adviser will help you with claims|
|Limited to 1 company or a small range of companies – not a full comparison||Your Adviser will compare most major companies and policies for you|
|No advice – just selling a product||Quality advice for you personally|
|Often more expensive||Often better cover, lower cost|
|No tax planning advice||Advice the most tax effective way to arrange your cover|
Additional reasons to use an Adviser
|No Red Tape, Assistance with Medicals|
|Estate Planning Assistance|
|The adviser works for the client|
|Tailored / Niche Advice|
|Policy Ownership Options|
The following Case Study highlights what can happen when the appropriate advice is not sought.
Case Study in Personal Trauma Insurance
Paul, a Chiropractor was unfortunately diagnosed with Cancer in 2010.
Fortunately he was paid $500,000 of Critical Illness Insurance benefit that he used to reduce his debts.
The good news is that Paul is now well again and working part time.
Recently he was approached by a telephone insurance representative who sold him $1,000,000 of Life Insurance with no medical questions asked.
Paul called to advise of his new life cover even though we had been unable to provide for him due to his existing health problems.
Unfortunately, if he was to die from pre-existing illnesses, this new policy provided without advice would not pay his family any benefits.
Direct Life insurance does not cover pre-existing illnesses or injuries and leaves the door wide open for insurers not to pay the claim.
However with quality advice clients can be underwritten at the time of application and guaranteed cover provided that will be paid in the event of a claim.
This will ensure your lifestyle and your family are fully protected when you need it most. Make sure you seek out a professional financial planning advisor when buying life insurance online. Call one of our advisers today.