Did you know?
Life insurance companies offer two types of insurance products: “Direct” (i.e. those policies you can access via insurance comparison websites or directly from the insurer (think, very expensive T.V. ads that you end up paying for)) and “Retail” (i.e. those policies you can access only through a financial adviser).
Is there a difference?
You’ll probably be surprised to hear that by obtaining an insurance policy “direct” you are generally getting a lower quality insurance policy at a higher premium!! Why is that? Put simply, because you are paying for their advertising costs!
This means that you are left with fewer options for cover and a greater number of exclusions to the policy (which, unless you make sure to read the fine print you may not even be aware of until it is too late), while still paying a higher premium for the privilege. What’s more, many “direct” insurance policies are not underwritten until you lodge a claim – this means that you won’t know whether the policy will actually cover you until you lodge your claim.
The “retail” product on the other hand (which costs the insurance company a lot less to promote), generally costs you about 40% less than its “direct” counterpart (even though it is offered by the same insurance company). It offers you a wider range of options for cover, is generally more comprehensive, and medical underwriting is done at time of application – this means that you will know from the start precisely what you are and are not covered for!
It is because of the way the “retail” policies are implemented (with upfront underwriting) that well over 90% of claims received are paid, while “direct” policies generally only honour around 50% of claims received.
As you can see, you are far better off seeing a professional adviser and accessing the “retail” version of the insurance policy.
Best of all…
Most financial advisers do not charge a fee for their insurance broking service as they receive a commission from the insurance company (much like a mortgage broker with a home loan), so it won’t cost you any extra to get the “retail” insurance policy. In fact, it will likely save you money!