Direct Insurance Consistently Overpriced


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.

Life Insurance Direct Founder and CEO, Russell Cain
Life Insurance Direct CEO, Russell Cain

The data, compiled by, 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. 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., 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


  1. Saying direct is “overpriced” is like saying a BMW is overpriced compared to a Hyundai; when both are cars designed to get you from A to B. It is more expensive than retail because the risk selection process is not as rigorous. Less questions and no medical requirements mean some people will get better terms than they would on a retail policy, leading to more claims. This is hardly ground-breaking research, nor is it a valid basis for claiming that it is more expensive than it should be. All it proves is the value of getting good advice.

    • One would suggest that due to the less rigorous underwriting, which can lead to greater avoiding of claims, you should be paying a lower premium cost. The market perception is that Direct is a “low cost option”. So in fact the article does have great validity in extinguishing this myth and actually counters your analogy. With Direct you are paying for BMW quality and getting a Ssangyong product.

      • The problem here goes way beyond cost Mist people think it is cheaper to many “Captain Riskies” And twin “hill Billy’s ” spuking cost savings in some comedic way that flows over into the life insurance area
        We all want a good premium but at what cost
        Many of these people who sign up direct are under the misconception that because a question was not asked about their recent illness ( whatever it may have been ) they are covered for it if it occurs again or a related illness “pops” up
        What a shock when underwriting at claim time takes place and the claim is declined
        We are incessantly lazy get Mum to ring up and fix it up we will deal with it later if it happens
        To me that’s not putting my mind at rest or in one direct insurers words life sorted ?Please !! It’s misleading and deceptive at best

    • You are unfortunately misinformed. Direct that doesn’t do underwriting at application time (some do) actually do it at claim time. This means you can be paying for insurance that doesn’t actually cover you at all and you have no idea until you wish to claim. Claim success rates for direct insurance is estimated to be 50% whereas retail is over 80%. The BMW is actually the retail cover, with better definitions and claim rates, and it is cheaper.
      Ask yourself how much advertising money is paid to get people into direct, and that is what you are paying more for. Hope you are happy with that!

    • What this all means is – good luck with your claim on the direct insurance product. Assuming it hasn’t already been cancelled by the insurer “whenever and for whatever” reason.

    • Technical View, you couldn’t be more incorrect with that statement. With direct you get a bare basics policy with a low chance of claims success at a much higher price. With upfront underwriting, retail insurers are able to accept the risks when they issue the policy, increasing their chances of paying claims. Direct, they underwrite at time of claim, which combined with inferior definitions, reduces the chances of a successful claim.
      Basically you’re paying much more for a Hyundai than a BMW

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