Life Brokers return to save the day

Help-Your-Loved-Ones-with-Life-Insurance-02By Steve Blizard, Roxburgh Securities & Investwest Life Brokerage    1 December 2014

How a Life Broker can protect your family against the massive rise in Insurance Premiums

Conventional thinking for most people today is that if they buy something online they will get it cheaper than buying the same thing at a shop.

However, when it comes to life insurance, buying directly from the insurer is usually the most expensive route, not the cheapest analysis by researcher Canstar shows.

Direct Life insurance products are costing nearly twice as much as rival products recommended through ­advisers, despite consumers not having to pay commissions for the recommendation.

Of greater concern however is that many direct insurance products also include ‘small-print’ exclusion clauses for problems resulting from common medical complaints, such as high cholesterol contributing to a heart attack or stroke.

Direct customers complete far fewer questions during their ­application process, so the online insurer has minimal information about the life insured.

As the insurer must include “unknown” risk factors within the premium, this can result in extremely expensive premiums for those applying online direct.

A number of direct and online ­policies have ‘pre-existing exemption clauses’ built in, meaning a customer with a medical condition when taking out a policy direct may not be covered if they die or become disabled as a result of that condition.

The absence of a servicing Life broker where direct purchases occur may result in customers not always being aware of their policy conditions or that their conditions have been excluded from the cover.

A fully-underwritten product, where the Life broker asks more questions of the applicant up front, generally provides greater certainty for the customer that their claim will be paid and will often cost a lot less.

It is not widely known that many people have had their lives saved through Life broker initiated medical testing.

Insurance requested blood tests and ECGs have identified many potentially serious or deadly conditions.

High Costs

In addition, the high costs of direct marketing, including television, online advertising and call centres, all add up to higher costs that must be paid for by the direct customer.

Compare the annual premiums for a 55-year-old non-smoking woman employed as an accountant and insured for $500,000.

Analysis of 10 products available from a Life broker and seven from direct insurers reveals the most expensive annual ­premium for a direct insurer is $2,328 and for insurers relying on a fee based adviser, it is only $1,367.

Life insurance policies are ­normally held with the same insurer over many years.

The difference between cheapest and most expensive is greater the longer the policies are held, underlining the need to continue working closely with a Life Broker to secure the best rate and policy terms.

Compare the pair

Members of “low cost” Industry superannuation funds have found themselves more exposed to recent increases in premiums for death and total and permanent disability (TPD) insurance than their counterparts in Retail Master Trusts and Corporate Super Funds, according to new data also released by SuperRatings.

The data validates the broad experience of the group life sector over the past two years which saw insurers lifting premiums in the face of generally higher claims experience within Industry funds.

The SuperRatings analysis said that “Not for Profit” Industry funds had suffered overall increases compared to their Retail Master Trust or Corporate Fund peers, whereby premiums declined over the three year period.

It said the disparity between sectors was vast with Not for Profit Industry superannuation funds bearing the brunt of the re-ratings, averaging a 22.4 per cent increase, while Retail Master Trusts experienced an average decrease in premiums of 2.3 per cent, while Corporate Funds fared far better than their peers, passing on an average 4.4 per cent decrease over the three year period.

Recent reports indicate disability premiums are rocketing up to 85 per cent due to an explosion in stress related claims by Industry super fund members.

One 34-year-old non-smoking male (White Collar professional) insured for $1 million Life and TPD with the CBUS Industry Super Fund has seen his annual premium skyrocket from $1,033 to $1,862 in the past three months.

The most competitive rate secured by his Life Broker was only $921, saving the executive $941 in premiums each year.

Similarly, the Government Employees Super Board, the default fund for WA’s 140,000 public servants, has lifted its death and TPD premiums 39 percent since November 2013.

Fortunately your family Life broker and adviser is bound by client best interest regulations to find the most competitive yet comprehensive cover to suit your personal situation.

With massive rate changes hitting direct insurers and Industry Super funds, now has never been a better time to contact our office via the form below to secure substantial savings on your insurance premiums.

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