Direct insurance dearer than advised
Direct life insurance policies are substantially more expensive than retail policies on average, according to research by a life insurance comparison website.
Life Insurance Direct released the 2016 Life Insurance Direct Quote Index, which revealed that on average, a 45-year-old male looking for $1,000,000 in life insurance could pay $148.56 in premiums with a direct policy provider, while the advised retail policy average premium was $89.91.
The index also found the average cost for a 45-year-old female seeking $1,000,000 worth of cover could pay 84 per cent more through a direct policy than through the advised retail channel.
Direct policy premiums remained consistently higher for females and males seeking $300,000, $500,000, and $700,000 worth of cover. A 50-year-old female seeking $300,000 worth of cover could pay over $73 in premiums through the direct policy channel, while she would be charged just under $50 through the advised channel.
lifeinsurancedirect.com.au chief executive, Russell Cain, said: "There are many misconceptions about which brands deliver value when it comes to life insurance".
"We speak to people all the time who have no idea they are being overcharged on their premiums, or where to find good value."
The study, which looked at 3,000 quotes from 32 brands including eight superannuation funds, showed a 45-year-old male seeking $500,000 life insurance could pay premiums ranging from $41 to $132.43 per month, equating to a difference of over $1,000 per annum.
"Interestingly, the research highlights that one insurer, owned by one of the four big banks have significantly reduced the premiums on their retail life insurance products from the 2015 data," Cain said.
Interestingly, both females and males with $100,000 worth of cover who were aged between 25 and 40 could expect to pay less with direct policies, with premiums levelling out for those aged 45.
With life insurance premiums and policy benefits differing significantly between brands and distribution channels, Cain said consumers must do their research to avoid being overcharged on life insurance premiums.
AUTHOR
Malavika Santhebennur
Recommended for you
With regional and rural suburbs exhibiting high spare capacity to invest, Money Management speaks to three regional advisers on the opportunities beyond the major cities and the importance of a strong network.
Platform consolidation is expected to accelerate among financial advisers this year, as software company Finura pinpoints which two platforms are set to be the winners, thanks to this trend.
The software provider has made several appointments in its APAC wealth propositions team, with a focus on driving growth across digital advice, Xplan and strategic partnerships.
The platform has announced it plans to close its Xplore managed discretionary account service in 2026 which holds $2 billion in funds under administration.
