Retail insurance premiums cheaper
Life insurance premiums on retail policies offered through financial advisers have found to be much cheaper than direct policies offered to the public by big insurance companies, research found.
Comparison website Life Insurance Direct researched over 20 life insurance offerings and produced the Life Insurance Direct Quote Index, and found premiums for a 50-year-old male wanting $500,000 of life insurance could differ by as much as $1600 a year.
The average monthly premium of advised (retail) policies is around $680 for a male aged 65 with $500,000 cover, while the average cost of direct policies is around $943.
Life Insurance Direct chief executive, Russell Cain, said retail policies were cheaper due to competition between financial advisers, with insurers competing on value to win advisers' business, with these savings then being passed onto clients and policy holders.
Cain also said advisers usually asked their clients more questions before formulating a policy.
"In general when a consumer buys a direct life insurance policy, not as many questions are asked about their medical history, whereas advised policies generally have more questions for the insured to answer and are therefore considered to have a greater level of medical underwriting, therefore are priced accordingly," he said.
For example, under Westpac Life Insurance Services' retail offering, BT Protection Plans, the premium for a 65-year-old female with $500,000 cover is $433.
However, the monthly premium for its direct policy offering, Westpac Lifetime Protect, sits at around $537.
The research found, however, that direct policies were cheaper for younger applicants, and for those whose sum insured is lower.
Cain said that while price should not be the only point of consideration when choosing life insurance, it is vital, and so consumers need to look around, get educated, and compare.
"We are seeing a lot of life insurance being advertised by big brands on television and online, but while it may be quick and easy to buy this way, it isn't always the best value for money," Cain said.
AUTHOR
Malavika Santhebennur
Recommended for you
The month of April enjoyed four back-to-back weeks of growth in financial adviser numbers, with this past week seeing a net rise of five.
ASIC has permanently banned a former Perth adviser after he made “materially misleading” statements to induce investors.
The Financial Services and Credit Panel has made a written order to a relevant provider after it gave advice regarding non-concessional contributions.
With the election taking place on Saturday (3 May), Adviser Ratings examines how the two major parties could shape the advice industry in the future.
