The current life insurance model is unsustainable due to changes in the approach of the financial advice industry to risk policies, Synchron director Don Trapnell said in a statement.
“One of the major reasons for lapse rates appears to be that clients fail to fully appreciate the emotional reasoning behind keeping a policy intact,” Mr Trapnell said.
“And the reason they do not appreciate it is due to the fact that advisers are now reluctant to explain these reasons because they do not want to be seen to be selling. Given the unacceptably high level of under-insurance in Australia, this is simply not good enough.”
Mr Trapnell implored advisers to focus on the emotional aspects of the insurance purchase decision-making process, adding that “life insurance cannot be bought, it must be sold”.
Younger advisers are especially susceptible to the sales-avoidance mentality, he said, lamenting that RG146 does not teach “sales skills”.
“We need newer advisers to learn those skills again,” he said. “The pendulum of political correctness has swung too far and the reasoning behind the whole purpose of life insurance has swung with it.”
