The Association of Financial Advisers (AFA) has continued to criticise direct insurance stating claims of consumers being satisfied with the products ignored the poor claims performance of direct life insurance.
The AFA said the short buying process and limited questions asked should set off alarm bells for consumers who may purchase a product that has not been underwritten, repeating its call that all life insurance policies should be underwritten at application.
“As is often the case in life – if it seems too good to be true, then it probably is,” AFA Chief Executive, Brad Fox said, adding that while direct insurance was easier to purchase it usually had a ‘sting is in the tail’.
“As is often the case in life – if it seems too good to be true, then it probably is”
Fox said greater access to life insurance via the direct model had not resulted in a better claims experience and consumers remained unaware of what they have purchased, despite their belief it was suited to their needs.
He also challenged the findings of a recent survey by Roy Morgan (see: Consumer Satisfaction With Life Insurance and Advice Declines) that found high levels of satisfaction when accessing direct life insurance stating the survey failed to highlight the poor claim outcomes of direct life insurance.
“Clearly, the consumer experience when purchasing direct life insurance may be perceived as better because the customer only has to answer a handful of questions, doesn’t have to go through the underwriting process, can make the purchase via credit card and have immediate cover put in place. But what have they actually bought? What happens at claim time?” Fox said.
Brad Fox had the opportunity to speak out against direct policies at the Parliamentary Joint Committee but chose “not to be drawn on the question” at the time (see previous article).
The LIF is through with no fight put up by the AFA. The PJC is through with no fight put up and Brad has just resigned.
This parting article is insulting to risk advisers. Do you think anyone can’t see through this??
@Reality Check, please note your first paragraph is not quite accurate.
Fox spoke against the underwriting process used by direct insurers and stated ” It should not be permissible to bypass underwriting at commencement of a policy but instigate it at time of claim” but refused to comment on a statement by a PJC member that direct insurance adverts were “wholly misleading” – http://rine.ws/2lvDfnc
In any case !!! what has been stated over the last 3 years by advisers and licensee’s is still being ignored.! Direct sales without question or query, underwriting at claim time is not a disaster waiting to happen !! it’s already here !!! . We have had several previous clients who went the so called “easy” way rather than do the “hard yards” and get it done properly come back after having a claim denied, absolutely “livered” that this can actually be allowed to happen. Mind you there were advised of the problems that may occur before they did it ! But the easy way and the cheap dollar approach was more than they could withstand.
As the majority of these products are pushed along by the banks and insurance companies looking for a quick market share it is highly unlikely judging by the past efforts of the PJC FSC AFA and FPA that anything is going to change ! at least not in the short term.
What a mess they have created all in the name of profit for the shareholders.
I reckon I know more about the shortfalls of on line insurance apps than Brad Fox ever will because I’ve done an in depth study of them. I’ve even sought opinions from medical specialists such as cardiologists on their medical definitions. If on line apps required an SoA it would put an end to their peddling junk to unsuspecting consumer because it would have to say that there are better policies available. For example, one of the big 4 banks has an on line trauma policy that is a dog, yet also owns a Life Insurance Company with a top of the range trauma policy. Same owner, same product designer. No advice for ‘the dog’, but best interest required for the Life Office policy. This activity out to be classified as criminal.
I have been sent an offer today to buy Life Insurance through Qantas, so it appears open slather for all and sundry.
Comments are closed.