Insurers are removing some of the barriers for being approved for life insurance cover in the hope that it will aid Australia’s underinsurance problem. Australia’s top three life insurers are also named…
According to financial research and ratings company CANSTAR, a change in the market now means insurers are looking to refer potential customers to underwriters rather than knock back applications on the grounds of occupations or pre-existing conditions.
“When direct life insurance first appeared in the market it was pretty much a black and white product. If you ticked all the boxes you got cover, but if you put a cross in just one, you were excluded,” said CANSTAR research manager Chris Groth.
However blanket exclusions have given way to a more realistic approach where it’s still quick and easy for most us to get cover but also caters for those in different circumstances.
“For example, there are many more people working in the mining industry these days but many of those are white collar workers who never see a mine site. They would typically obtain direct life insurance easily,” said Groth.
“On the other hand, the miner that is exposed to hazardous conditions every day would need a fully underwritten policy. This new approach to direct life would cater for those people that fall between the two extreme ends of the occupation scale i.e. those who work in the office the majority of the time but occassionally go on site.”
It is hoped the change in life insurance philosophy will address Australia’s severe underinsurance problem, but it does leave question marks over the role of the broker.
"In the past one of the biggest barriers to people obtaining additional cover was having to go through the full underwriting process. Direct life insurance is a great product for people who should have life insurance but were put off by the whole financial planner process,” said Groth said
“The idea of applying online or over the phone really appeals to people who are time poor, work irregular hours or live in remote locations, particularly when you can add Trauma and Total and Permanent Disability cover on the same application.”
Direct life and income protection insurances grew 20.7% in the year ending December 2011, according to the Direct Life Insurance report put out by Rice Warner Actuaries.
CANSTAR’s research has also come up with the three insurers who stood out for the value they offer consumers in the area of direct life insurance.
“We couldn’t go past Allianz, Real Insurance and Zurich in this year’s comparison,” said Groth. “All three top companies are very strong in the things that matter – the suite of features covered, reasonable premium costs and ease of eligibility for the majority of consumers.”
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