Financial planners positioned to engage life insurance customers
Despite the rise of direct channels, financial planners are better poised to engage customers with life insurance, according to industry executives.
Rice Warner's direct life insurance report for 2011 said direct life insurance sales were up 11.3 per cent in the 2011 calendar year, with the take-up of products spiking 86 per cent in the four years to December 2011.
But while direct life insurance has filled a gap for cash and time-poor consumers seeking death cover, the country is still under-insured, with engagement one of the major problems.
Suncorp executive manager for Direct Life Jane Power said the industry needed to convert products into tangible assets that have relevance to customers' lives.
She said the industry could learn from the increased popularity of funeral cover, which customers see as tangible and relevant to their future.
Rice Warner said the market was saturated and growing, with in-force premiums for funeral cover reaching 15.4 per cent in 2011.
"I think if we can make it tangible … as an industry we are going to grow and every channel will benefit, be it the financial planner, the direct operators - we all benefit from that by making that experience for customers so much simpler," Power said.
Macquarie Bank reported in May that working parents with stand-alone policies decreased from 28 per cent in 2006 to 18 per cent in 2012.
Gary Lembit, head of research at Macquarie Adviser Services, told the Macquarie Life roadshow that while customers were cautious when making life decisions, they wanted to appear confident and needed a financial planner to help them along.
Lembit said life insurance was often placed in the "too hard basket" because customers "didn't have a clue" about life insurance and perceived the process as difficult and cumbersome.
He said financial planners needed to imbue customers with confidence through conversations about their lives, which brought the product into existence.
Power agreed that financial planners have more opportunities to engage with customers in a face-to-face environment, but said to raise the level of insurance with scale would be harder to achieve through the adviser channel.
She said the industry needed to work to make products simpler to engage customers in a subject they shied away from.
The great thing about life insurance through superannuation, Power said, was that it was simple, and she added that some cover was better than no cover.
"That's what appeals to the customer, but there's still a real disconnect between what customers think they have and what they really have," she said.
Power said while direct life insurance is yet to shake up Australia's under-insurance problem, she hoped that by increasing channels for customers, the industry would slowly begin to see changes, but engagement was key.
Recommended for you
AFCA has confirmed United Global Capital’s membership of the body will not be extended to accept further complaints, avoiding a repeat of the Dixon Advisory scenario.
Three of Australia’s largest financial advice groups have shared their thoughts with Money Management on whether they would include crypto on their approved product lists.
Shadow treasurer Angus Taylor has vowed to introduce a bill to legislate a raft of financial services reforms if the Coalition is elected.
Money Management examines the share price of financial advice licensees over one year to 31 March, with M&A actions in the final quarter having a positive effect for two licensees.
