What is No Advice Life Insurance?
Get life insurance without an adviser from these direct brands
Why would I buy life insurance without advice?
There are a number of benefits of buying no advice life insurance. These include:
- It’s easy to apply. Purchasing life insurance through an adviser or consultant can seem like a complex and time-consuming process, which deters many people from taking out cover. Direct life insurance, however, is designed to make taking out life insurance much easier. If you are under 70 years old, you can apply for cover quickly online or over the phone, as most policies will not require you to undergo any medical underwriting before having your application approved. It lets consumer’s access adequate and affordable cover in a quick and easy manner.
- Immediate death cover. Most policies provide immediate death cover once your application has been received. Not only is this convenient, it also offers added peace of mind.
- It’s easy to understand. No advice life insurance is designed to be simple and straightforward. This type of insurance is less about a complicated structure of benefits and more about providing an adequate level of cover.
- You can bundle your cover. Many insurance providers allow you to add benefits like total and permanent disablement cover, trauma cover and income protection. This lets you tailor cover to suit your specific needs.
- You get a fast response. You’ll know virtually straight away whether your application for life insurance without advice has been approved.
What's the difference between buying with and without advice?
More Australians choosing to purchase life insurance without an adviser
According to TAL1 (An insurer that provides life insurance through both an adviser and directly to the consumer), the popularity of no advice life insurance in Australia has been steadily increasing in recent years.
Australian consumers, it seems, are becoming increasingly confident in making their own decisions about which life insurance policy is best for them, not just seeking advice from an insurance consultant. With the direct life insurance market continuing to expand, the popularity if this type of insurance in Australia is expected to increase further.
The reasons for this growth can be traced back to the benefits of no advice life insurance
- The quick and easy application process
- The straightforward and easy to understand policies
- No need for medical underwriting. Increased competition drives prices down.
What does this mean for advised products?
As direct life insurance continues to escalate its market presence, more consumers are starting to see it as a viable option for their insurance needs. This also means there is greater choice for consumers, with a larger range of products to choose from. However, there will always be a place for advisers in the Australian insurance industry. Adviser based life insurance often can fill the gaps that direct offerings don't cover e.g.
- Medical underwriting for pre-existing conditions
- Help with comparing products
- The ability to tailor your policy
- Help with the application process
Changes in the design of no advice life insurance products
In the past, direct life insurance products were quite simple and design and were limited in the level of cover that they were able to provide to applicants. The popularity of purchasing cover direct in recent years has seen the design of direct products merge closer to that of those offered through advisers. As an example, Noble Oak allows applicants to take out up to $15 million in cover on their term life policy, a sum closely matched to products from companies with full underwriting. Put simply, applicants can now enjoy many of the same policy benefits and features when purchasing direct that they would if purchasing through an adviser.
Is life insurance without advice cheaper?
In some cases, life insurance without advice can actually be more affordable than insurance purchased through an adviser. Direct life insurance brands adopt a number of approaches to the risk of insuring consumers with limited underwriting, which in turn helps them keep premium costs down. However, one thing to be aware of is the set type of cover that's provided with a direct policy e.g. it may not be sufficient for your needs.
Additionally, some 'low-risk' individuals may even be able to get a cheaper policy with an adviser with cover that is tailored to their lifestyle.
Traps to look out for when it comes to direct life insurance
Despite its undoubted benefits, there are a handful of drawbacks to taking out life insurance without advice. These possible downsides include:
- Taking out an inadequate level of cover. Cover offered under many direct life insurance policies is still often limited due to the minimal level of underwriting involved. No advice life insurance policies are usually ‘no-frills’ offerings that don’t offer the same level of cover as policies obtained through an adviser. If you purchase insurance through an adviser, you’ll end up with a policy that has been customised to suit your particular needs. Direct life insurance policies, however, take more of a ‘one size fits all’ approach, and the sums insured are usually lower, so they may not provide enough cover.
- Not having a clear understanding of different policy features. Once again, this drawback is associated with not having an adviser on hand to run you through the ins and outs of different policies. An experienced adviser will be able to help you make sense of complicated product disclosure statements and terms and conditions. Many people who buy direct life insurance, however, take out a policy without having a clear understanding of exactly what their policy does and doesn’t cover. Take the time to read the PDS closely and make sure you comprehend what each feature of your policy means.
- Increased exclusions. As a general rule, direct life insurance policies will contain more exclusions than policies purchased with advice. This can be in part traced back to the simple application process—because direct life insurance companies ask very few questions about your health and occupation when you apply, their policies cannot be fully underwritten. As a result, a larger range of standard exclusions are placed on these policies. These extra exclusions can be for things like some hazardous or dangerous sports, claims related to drug or alcohol use, riots or acts of terrorism or war, risky occupations and a range of pre-existing medical conditions. Some policies will also reduce the amount of cover offered as the policyholder gets older.
Should I purchase personal insurance without advice?
Direct life insurance is generally considered a good option for people that are confident in their knowledge of the insurance market to find and apply for cover without the assistance of a consultant. Other candidates for direct cover are those that are simply quite time poor and do not wish to spend the extra time that it takes to apply through a consultant. In any event, finder recommends that anyone considering direct cover has a clear understanding of what the terms and conditions of their policy prior to submitting their application. Despite the purchase process being quicker, it is no reason to neglect reading through the product disclosure statement to ensure you know exactly what you will be covered for.
1. Money Management 2016