Ratings house endorses value of financial planners

Ratings group Canstar Cannex has warned that while purchasing life insurance direct is easier than doing so through a financial planner, it may mean consumers pay higher premiums.

The group said there are advantages to a “one-size-fits-all” life insurance policy, including a more simple application process, fewer (if any) requirements around medical information, as well as quick responses from life companies and instant insurance coverage.

As such, direct insurance does fill a useful niche and its popularity is on the rise, according to Canstar Cannex’s latest direct life insurance ratings report.

The group said direct personal insurance products were designed for “people who really should have life insurance but can’t be bothered with the whole financial planning process”. However, the group also warned that buying personal insurance direct from a life company is not without risks.

The group said buying over the counter “negates the need to see a financial planner who can assess your individual situation and advise on a product or course of action that you perhaps had not thought about”.

This can result in the policy “not necessarily being cheaper” than a product that is more tailored to a client’s needs, the report stated.

Furthermore, because a client is not drawing on the expertise of a financial planner, consumers must compensate by carefully examining any policy exclusions, with a particular focus on pre-existing medical conditions, among other matters.

“A financial planner understands what is covered and what is not covered in all the different policies and can steer you towards the one that best meets your needs.”

The group’s research found that, in the direct space, MetLife and Allianz scored highest on a combination of premium price and features offered with their respective life insurance policies, Simply Life and Life Plan.