Have you been watching much TV lately? Rarely can you get through a commercial break on TV without seeing an advertisement to buy life insurance ‘direct’. Usually, the business models used by the Direct Insurance companies will see them offer basic no frills insurance policies with limited ‘personal’ service.
We believe that you need to know what it is you are buying – exactly what the insurance covers and very importantly, what the insurances does not cover.
A lot of people ask me why should they get professional advice from a qualified financial adviser when they can buy insurance cheaply and quickly by going direct online. I usually reply with a question of our own “Well how often is your decision to buy something based on price alone?” I’d suggest – not often when it comes to important purchases.
Stewart Bell from Elixir Consulting compiled some research for Zurich Australia (read it here) on the value of getting risk insurance advice from a professional adviser. They key benefits of seeking professional advice included:
- Field underwriting – the policy is underwritten (accepted and approved) at the time of application rather than the time of claim
- Expectation management– the advisers guides the process of what is required in terms of personal information, medicals etc and makes sure it happens
- Suitability– knowing the right type and level of cover required depending on life stage, debt and family responibilities
- Structuring– whether to hold cover inside or outside super, own occupation versus any occupation, tax implications
- Access to other professionals– complex advice may require access to specialist tax or legal advice and adviser’s have a network they can rely on
- Personal skills– unemotional advice as to the best outcome for the client with what can be difficult possibilities to discuss
- Estate planning– discussing the impact of wealth passing to younger generations is an important factor – making sure the money goes to the right people at the right time
- Education– a trusted source of information
- Niche advice– often advisers have a speciality such as business owner’s, medical professionals or mining industry
- Someone to speak to– the most important benefit is having an adviser you can call if something goes wrong because that’s when you’ll need the most help.
I would add to the list – the knowledge of knowing that if something ever happens all the dreams and aspirations you have for your family are still achievable.
Life insurance is like a seatbelt – you wear it but really hope that you’ll never need it.
A profesional post from Dave Rae
More about Dave Rae – I am a financial planner and adviser based in Canberra but working with clients all over Australia. Over the past 15 years I’ve gained a wealth of experience across investing, personal insurance, superannuation and most importantly guiding clients on their financial journey. Contact Dave Rae