AFA national president Marc Bineham has criticised direct life insurance channels, saying they have “inherent weaknesses” compared to advised policies.
Mr Bineham says outcomes from direct and group life insurance “do not measure up when compared with consumer outcomes from life insurance cover arranged by a professional financial adviser”.
“By seeing a financial adviser, people have the benefit of receiving an adviser’s expert advice on their specific life insurance needs. They have policies containing strong life insurance contracts and often those policies represent better value than they can access by buying direct,” he said in a statement.
Mr Bineham pointed to the findings in ASIC’s new life insurance report as proof that retail advised life insurance provide better claims outcomes for consumers than group and direct.
“This is no coincidence, as life insurance advisers provide greater certainty to their clients in two ways. Firstly, advised retail life insurance is underwritten at application time, rather than at claims time as is often the case with the other forms of life insurance. And secondly, financial advisers manage their clients’ claims,” he said.
Nonetheless, Mr Bineham believes more work needs to be done to ensure that trust in life insurance grows.
“The AFA is committed to further raising standards in life insurance advice as it is crucial to the prosperity of Australia,” he said.
“We will also continue to apply pressure on reforms to the non-advised channels to improve confidence and trust.”
Last week, NobleOak chief executive Anthony Brown said at the Strategic Insight’s Direct Life Insurance Awards that customers with life insurance policies attained through advisers were “not getting good value for money” compared to direct policies.
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