Consumers Bypass Costly Advice for Online Information

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Consumers regard financial advice on life insurance as too expensive and will continue to use online information and providers to bypass advisers in purchasing life insurance, according to research into changing consumer behaviour.

The research, contained in the Life Insurance in Australia: Consumer Behaviour Trandformation Research Whitepaper, released by online insurer NobleOak stated this trend would continue to grow as consumers were provided with better resources to research life insurance decisions and access life insurance products.

The whitepaper stated that while around 25% of consumers used or would use an adviser as their primary source of advice for life insurance, compared with 32.2% using the internet, 56.5% stated they were unwilling to pay anything for that advice. Around 25% would only pay up to $100 for advice while around 17% would pay up to $1000 for advice, with less than 2% paying above that figure.

72% of consumers “…would be confident in purchasing a Life insurance or Income Protection product online, without financial advice…”

NobleOak said this was a fundamental problem for the advice sector when combined with the finding that 72% of consumers “…would be confident in purchasing a Life insurance or Income Protection product online, without financial advice, if the right resources were available”.

“These findings do infer a problem with perceived value Australians receive for financial advice in relation to Life insurance. This is very challenging for financial advisers who need to fund high upfront advice costs to provide the right advice under strict compliance rules to their clients,” the paper stated.

In the paper, NobleOak stated that low rates of online purchases are likely to climb in the future as people feel they need insurance with many believing there was sufficient information to make a purchasing decision without an adviser.

According to the research conducted for the paper only 6.5% of consumers have purchased Life insurance products online but 38.6% would purchase Life insurance online or through a mobile device if they needed it.

At the same time, 73.7% of the 1000 consumers surveyed for the research felt there was enough information online to understand the different types of Life insurance or Income Protection cover they need.

Despite this, NobleOak said many would still lack an understanding of how much and what type of cover they required but this was likely to also be addressed by more comprehensive online sources of information.



6 COMMENTS

  1. I bet the survey didn’t ask “Do you know what a pre existing condition exclusion is and how it could result in your claim being rejected?”

    I suspect less than 1% of people understand that. Which is why 99% of people need advice.

  2. We have been saying for years that clients are not prepared to pay fee’s that cover even a small percentage of the costs to provide advice and this backs up what we have known all along.

    Unlike the guru’s who have been on self promotion tours selling their biased opinions with little facts to back up their absurd statements, we, like many other advisers have actually asked our clients what they are prepared to pay and 98% who would not pay over $1,000 is an accurate figure.

    The majority prefer to pay NIL and will not pay anymore than a trivial amount if asked.

    The fantasy world of clients joyously paying thousands of dollars to cover our costs for advice, placement and administration of their Life Policies, is a figment of the guru’s imagination and until these people can show conclusive proof that their vague assumptions have financial merit that will suit the entire population, then their comments should be filed into the delete column.

  3. I would love to know how those experts who continue to push the idea that consumers will (and are happy to) pay a premium for their risk insurance AND a fee to their risk only adviser, are reacting to the above research?

  4. Love a survey that draws on 1000 people and then extrapolates that as being indicative of a national trend!
    I also enjoy a headline figure of 72% where the question leads: “With the right resources, would you be confident…
    More low quality research trying to pass itself of as noteworthy rather than cringeworthy!

  5. Yep buying life insruance is just like grabbing “bargain” towels on catch of the day say the gurus. Put a bit of personal data in, tick a few boxes and there is your PERFECT product, no humna needed,

    A sample of 1000 provides a very reasonable degree of certainty about the views of a large population. You hear every second talk back caller saying “they didnt call me so the results aren’t accurate but that’s what samples are for – an effcient way to get the views of a large population. The IF is the selection of the sample and whether its representative of the whole popualtion and whether the questions are objective and not leading or misleading.

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