AFA chief executive Brad Fox has criticised a recent life insurer survey highlighting positive customer feedback to direct life insurance, saying it doesn’t capture claims outcomes.
ifa sister publication Risk Adviser reported on a Roy Morgan survey that found purchasing insurance through a direct channel resulted in higher satisfaction from the customer than if purchased through other channels such as an adviser.
Mr Fox said in a statement that the survey failed to highlight the full picture, citing poor claim outcomes of direct life insurance and, as a result, is calling for all life insurance to be underwritten at application time to ensure a better claims experience for consumers.
“It is absolutely clear that the best way to reduce the risk of a policy not paying out at claim time is to see a financial adviser to arrange your life insurance needs,” Mr Fox said.
“It will take longer to put the insurance in place because it will be carefully underwritten in line with your medical and family history before it is offered to you. This gives you greater certainty that you are covered if you have a claim.”
Mr Fox further added that consumers don’t have the same certainty with buying life insurance directly because these policies are not usually underwritten until the claim is lodged.
“At claim time, if a direct insurer determines you had health issues back when you purchased the policy, or even in the years before, they may only refund the premiums and not pay out,” he said.
“We think that is unconscionable.”
FASEA has conceded its guidance on scaled advice may not be legally reliable, ad...
A key super industry body has suggested the government’s forthcoming reforms t...
With rising compliance costs and more risks abounding for planners who try to be...