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.”
Brad Fox had the opportunity to speak out against direct policies at the Parliamentary Joint Committee but chose “not to be drawn on the question” at the time (see previous article).
Just like the LIF the AFA are just trying to apply lip service to risk advisers when it is too late having not done the right thing in the first place.
I suspect the FSC have given permission for this article because it means nothing and will achieve nothing.
The AFA had the chance to do the right thing. They chose not to and because of this customers can expect to be stitched up with more direct junk in the future just as their paymasters the FSC want.
What a joke.
So given that the persistancy rates with direct insurers are significantly worse than advised business, how does that work?
what I really believe is the truth here is that when someone buys direct insurance and doesn’t have to ‘Fess up to real levels of needs based cover, and is happier because there are only 6 questions, no SOA, no duty of care blah blah blah .
what they really mean is it was “Easy”. as we all know , Easy ain’t necessarily the best way to go!
as Brad Fox says, I would be more interested in the levels of claims satisfaction.
But Hey, what would I know, i only have 35 years of practice at this.
You mean like the comminsure claims outcomes?
The poor Comminsure claims outcomes trumpeted by certain elements of the media were mostly from union super funds (REST, Care etc). Comminsure was the wholesaler for the cheap junk insurance products requested by those funds for their members.
Yep, and there’s still hasn’t been any investigation into this by ASIC, the media or the government. It’s all been laid at the feet of the insurers. You can understand that the Labor party wouldnt be saying anything, as this would upset all their union mates sitting on boards of all the Union Super Funds. Ultimately it’s an issue for the trustees of these funds. They are the ones that have opted for bad cover for their existing members to make it easier for new members to join the fund and get cover. Who is it that the trustees owe their duty of care to? You would think it was existing members, but it seems that getting bigger is just as much an issue for Union Super Funds as it is for retail super funds. The drive to get more market share means that these funds are putting their own interests first and their existing members second. Suckitup & Gotcha will be funding this issue as a test case soon when they get a longstanding member of Australian Super who gets denied a TPD claim after the definition was changed in the last few years.