More Australians are turning to non-advice, direct life insurance products, as the DIY insurance sector offers more attractive customer solutions, according to research firm CANSTAR CANNEX (Canstar).
… life companies… are making their insurance offers more accessible by covering pre-existing medical conditions
In announcing its 2010 Direct Life Insurance Star Ratings Awards, Canstar’s Head of Wealth Management, Stephen Mitchell, made the telling observation that life companies involved in the direct insurance market are making their insurance offers more accessible by covering pre-existing medical conditions that, in the past, would have meant less customers could qualify for these minimal underwriting products:
“It means that consumers who may once have been refused life insurance are now in with a chance in many cases and this is making direct life insurance more appealing across the board,” said Mr Mitchell.
Canstar cites a number of advantages to the consumer in taking out direct life insurance:
- There is no involvement by a financial planner
- The cover is easy to apply for, requiring minimal medical information
- Applications can be completed online, in a branch or over the phone
But while no involvement by a financial planner is listed as a benefit to the consumer in following the direct life insurance path, Canstar also highlights the trade-off to consumers of not seeking advice:
‘The trade-off is that you don’t have the guidance of a financial planner who understands what is covered and what is not covered in all the different policies and can steer you towards the one that best meets your needs.’
Because of the lack of adviser input, Canstar says the most important point for consumers is to be fully aware of what they are not covered for in the direct insurance policy:
“You’ve got to remember that you are not being guided by a licensed financial planner and so you have to compensate by looking very carefully at the exclusions before you sign up,” said Mr Mitchell.
Canstar reports there are now sixteen companies offering direct life insurance products and that there was a three-way tie for its major award. The joint 2010 winners are Allianz, Zurich and real Insurance, each of whom offered value and quality across their rates and features.
Scoring was weighted 55% on pricing and 45% for product features across four different age groups from young adults to empty nesters.
Click here to access more details on Canstar’s 2010 Direct Life Insurance Star Ratings.
