"Life Insurance Advice is valuable" something we here at Seneca Group believe strongly in – and have consistently promoted - has now been supported factually with some important ‘first time available’ data from Australia comparing distribution channels for life insurance where $7.2 billion in claims was paid out in 2015.
The Australian industry regulator’s ASIC Report 498 has been welcomed by Adviser bodies on the other side of the Tasman stating “it was the first report of its kind to compare all three distribution channels there”. Here are the highlights:
The data shows 70% of the claims paid in Australia were via the retail life insurance (Advised) channel
Proving the value that financial advisers deliver to clients - particularly when advised policies have stronger insurance contracts and represent better value than policies accessed by buying direct. That position is generally the truth in New Zealand also when comparing Advice driven plans versus those sold direct by phone or online. It’s not only differences in wording & coverage but the quality & depth of underwriting assessment at the outset is almost always better which decreases the risk for unintentional non-disclosure by an insurance applicant.
The report reinforces the view that advised policies lead to better claims outcomes than for direct or group insurance.
“Advised retail life insurance was typically thoroughly underwritten at application time and was actively managed by an Adviser at claim time”. It showed that claims from the ‘Non Advised’ (Direct) distribution channel were 71% more likely to be denied than if a policy had been sourced through the Retail (Advised) channel, while a claim on a group policy was 14% more likely to be denied compared with a retail policy.
You can draw a conclusion from this that Advice driven plans are more likely to meet your needs when it really counts – at claim time – than the ones bought by phone or online. Based on our values and experience you can see from this why it’s something we felt we already knew and really believe in !