The Association of Financial Advisers (AFA) has distanced advised life insurance from group and direct insurance claiming the former is a superior product that is often cheaper than the offer forms of insurance.
AFA, Chief Executive, Brad Fox said “advised retail policies have the highest quality contracts, the highest claims pay out and are ironically often the cheapest”.
The statement was part of wider comments directed at consumers urging them not to cancel life insurance policies following recent media coverage regarding poor claims experiences.
“Advised retail policies have the highest quality contracts, the highest claims pay out and are ironically often the cheapest”
Fox said life insurance provided an opportunity for people to recover from a serious accident or illnesses as well as giving time to grieve while maintaining financial dignity after the death of a family member, and despite recent media coverage paid out around $20 million every day.
The AFA stated that collectively $7.2 billion in life insurance claims were paid each year in Australia and it was important that consumers understood what life insurance they held and the quality of the contract before they made any decision to cancel or change it.
The association stated that group life insurance was the main focus of the recent media coverage and highlighted that claimants did not deal with an insurer but with a super fund instead, with policies that often had weaker definitions to keep the costs of premiums at a low level.
The AFA also stated that direct insurance cost more than other forms of insurance to cover high marketing costs and used weaker definitions compared with advised insurance with policies underwritten at the time of a claim.
Sorry Brad this should have all been put on the table in no uncertain terms back in 2015 when this mess started. Its like shutting the gate after the horse has bolted.
Easy access to inferior products and our usual ” close enough is good enough” attitude of most consumers is going to lead to claims like FOS has never seen before. I would like to get a comparison of complaints submitted to them in say December 2016 and compare it to December 2015 ? I bet I can guess where the majority will come from.
The consumer needs to be educated not cohersed into purchasing something they think will do the job. We already have clients coming back after a bad “online” experience which is great but a little sad that they had to learn the hard way that the grass is not always “greener” on the other side
There is little merit in the AFA talking up how much better, advised retail clients are in comparison to Group and Direct policies people hold, unless the AFA backs it up with a concerted attack on the lies and mistruths that the FSC has perpetrated and educate the Government about the real damage being done by Direct product floggers, who provide none of the best interest duties we must and willingly provide.
We now have hundreds of Direct product flogger Amateurs, who are destroying the foundations of the Life Industry, by being allowed to run riot with no restriction.
Brad, if you are truly genuine with your statement and want to provide proper representation to retail Advisers, then the AFA needs to change TACK NOW before we end up on the rocks.
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