Advisers Agree Insurance Is Too Expensive

5
Is Life Insurance in Australia Too Expensive?
  • Depends on type of product (51%)
  • Yes (28%)
  • No (21%)
  • Not sure (0%)

Life insurance is too expensive, but it does depend on the type of product; according to the majority of readers responding to our latest poll.

To date, 45% have said they agree that certain types of risk insurance are too expensive. While no examples are specified, this could indicate that advisers are concerned that certain product categories, like direct-sold life insurance, are priced too high, compared with retail policies.

Or are advisers concerned that premium arrangements, in particular the stepped model, are adding to the affordability issue? As one reader commented:

“The industry needs to find a way to try to even out premium increases so we do not lose loyal people who constantly tell us that stepped premium hikes are too much of a shock…”

Perhaps it is not the core product that is too expensive, but the additional features and benefits that are offered…

“The marketing spin of advisers pushing largely irrelevant ancillary benefits just so they can push up premiums and make more commission has exacerbated the problem greatly. Take a look at the things people actually claim on, insure only those things, and don’t try to convince people they need things they don’t. Ancillary benefits are mostly just unnecessary marketing stuff.”

Whatever the reason, it is clear that with just 22% of readers (so far) believing life insurance is not too expensive, pricing is definitely an issue the industry needs to address. We would love to know your thoughts on affordability, as our poll remains open for another week…

 



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5 COMMENTS

  2. Would like to know who made the comment about advisers ‘upselling’ additional benefits to increase their commission. Not once have I ever thought that and it’s insulting to suggest it. I’m much more concerned with recommending only a basic policy and then a client suffering a condition that would have been covered under a ‘marketing spin’ (ie comprehensive) policy. Am pretty sure if that were to happen a file note saying that I didn’t recommend comprehensive because it is all marketing spin and unncessary would go down a treat when the lawyers come knocking.

  3. It is a known fact that stepped premiums increase each year by anything from 10% up to 20% or more depending on the product, and the age of the client. This is not taking into account indexation that occurs every year with policies.
    Clients taking out these (initially) cheaper stepped premiums should be warned that this is the way these types of premiums work upfront.
    As with all things in life, for your average client, buying insurance is a balancing act between affordability and the piece of mind it provides.

  4. I have had a self employed client who has had 2 claims paid that would not have been paid under a standard policy. These claim payments were crucial to him as he could not take the normal time a employee on salary could have off work, as his Business suffered in the few weeks he was away from his Business and these payments tied him over till he could get back and manage his Business.
    He had to pay more for the extra benefit options and made numerous calls to take them off, though I explained the reasons why he needed them each time he rang and now he says thank god he took my advise as he would have been in trouble without the money he recieved.

    There is a reason why specialist risk advisers recommend these policies. It is to match up a clients circumstances with appropriate policies and reinforce the benefits when the client wants to reduce premiums.

  5. Sadly, the current generation of consumers are unable to purchase Whole of Life insurance. This was the product that got cheaper as you aged and in many case you would stop paying premiums well before you were expected to die, but your cover would still increase yearly. If you accidentally missed a premium payment, or couldn’t afford, the policy could be held in place by the non-forfeiture provisions. Topped up with term insurance, the perfect insurance package.

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