Direct life insurance is more expensive across almost every age range and level of cover generally costing from 25% to 45% more than advised retail life insurance, according to data compiled by a life insurance advisory group.
The data, compiled by lifeinsurancedirect.com.au, compared 13 direct insurance offerings with 11 major retail advised insurance offerings and found the average cost of direct insurance was over 45% more expensive for $1 million of life cover than the average cost of advised retail insurance, for both men and women aged 25 to 55.
The data, which is publicly available via the group’s Life Insurance Direct Quote Index, also found the same price differences in average insurance costs for polices with $1.2 million and $1.5 million of life cover, for women aged 25 to 55 and men aged 35 to 55.
The average cost of direct insurance also remained higher than the average cost of retail advised insurance at the $300,000, $500,000 and $700,000 levels. Direct insurance become the most expensive at age 45 for women where the average cost of direct insurance for $300,000 of cover was 54% more expensive than retail advised insurance. This figure was even higher at $700,000 of life cover where the average direct insurance was 72% more expensive than retail advised insurance.
The cost of average direct insurance for men at these three levels peaked at age 40, where it ranged from 42% more expensive than retail advised insurance for $300,000 of life cover to being 63% more expensive at $700,000 of life cover.
The average cost of direct insurance was only cheaper than the average retail cost when the level of cover was at $100,000 and the age of the insured was 25 to 45 for both men and women and when cover was at $200,000 for women aged from 25 to 30.
lifeinsurancedirect.com.au said the data was sourced from publicly available information and was compiled during May and June 2016 with the pricing of the life cover based on a non-smoker, blue collar worker living in NSW.
lifeinsurancedirect.com.au, Chief Executive, Russell Cain said the research examined over 3000 quotes from 32 insurance brands and demonstrates that some well known insurance brands were consistently overcharging consumers for life insurance premiums.
“There are many misconceptions about which brands deliver value when it comes to life insurance. We speak to people all the time who have no idea they are being overcharged on their premiums, or where to find good value,” Cain said.
Cain said the updated Index now included premium data for policies sourced through eight major super funds, as well as the direct and retail policy markets and confirmed the finding from 2015 that that on average direct life insurance policies are significantly more expensive than retail policies.
The quote index can be found here: Life Insurance Direct Quote Index