In a submission made to the Life Insurance and Advice Working Group by Elixir Consulting, the consulting firm highlighted that direct insurers are “damaging the general perception of insurance” as clients find they are not “covered adequately” by the policies they purchase.
Speaking to Risk Adviser in light of these comments, Elixir managing director Sue Viskovic explained that because direct insurers conduct the underwriting process when a claim is lodged, instead of at the point of sale, this can often mean an insurer can refuse the claim.
“There is a greater risk they will deny the claim based on either previous medical history or non-disclosure,” Ms Viskovic said.
This is where it is important for an adviser to assist clients with insurance since they can ensure a greater chance of a claim being paid out, she explained.
“When a financial planner provides advice on an insurance policy, they do the ‘truth breaking’ at the underwriting time.
“What that means is that if a client does need to make a claim later they have already got proof that it wasn’t a pre-existing condition so they are more likely to get their claim paid,” she said.
Within the submission Elixir also highlighted that the “rise” of direct insurers will “hopefully raise people’s awareness” of the need for life and risk insurance.
“I think people just go through life not wanting to think about the unthinkable and that they should ignore it,” Ms Viskovic said.
“The fact that they are seeing it on [television] and it is in their face more often about how important it is to get insured, then that has got to be a good thing.
“Then it is about how do we get awareness up and get the word out about the importance of actually taking advice,” she said.
