Making the bet of your life
Obtaining life insurance nowadays could be seen as the ultimate wager. You’re literally betting on the outcome of your life and what happens in it, which can be stressful.
Some Insurers advertise to make it as easy as possible to obtain some forms of insurance, for example, just call the 1300 number advertised on TV and you can be insured quickly after answering a few simple questions. However, there are downsides to consider:
Life Insurance purchased over the phone or online
Generally, when you buy life insurance over the phone from a call centre or online, the application assessment process often appears simpler. But in reality, these insurance offers just appeal to your request for brevity and simplicity. Be wary!
Insurers, as a general rule, will investigate your previous medical history when assessing a claim. They may check for any evidence of non-disclosure (unintentional or deliberate) at application time which may give reason to amend the original acceptance terms or deny a claim.
This belated due diligence is known in the life insurance industry as retrospective underwriting.
Where only minimal upfront application checks regarding medical history are conducted prior to issuing a life insurance policy, which is often the case for certain ‘direct type’ insurance offers, the retrospective checks may result in delays, rejection of a claim, or even cancelling the insurance, due to non-disclosure, even if this non-disclosure has been innocent and/or unintentional.
Limited application checks may have a price of their own
For insurance offers where there are limited upfront application assessment checks, the more likely there may be issues or delays at claim time.
The policy conditions of some ‘quick & easy’ policies may often exclude claims for certain medical conditions such as strokes, heart attack and haemorrhages.
Do you have time to read and understand all the policy conditions & exclusions? By going through a more comprehensive application process when purchasing cover through an adviser, you and your family will have more certainty and peace of mind with the insurance. An adviser will help you understand what you are and are not covered for and may assist in obtaining the most favourable and competitive terms available in the market.
Purchasing insurance online or over the phone isn’t usually cheaper, either.
Product research ratings company Canstar, Advised v’s Direct Income Protection article dated 16 March 2016, found that buying insurance directly from a company can be more expensive than buying it through a financial adviser.
The ratings group also suggests seeking professional advice to work through the policy conditions, options & exclusions in determining whether a policy may be suitable for you. In other words, by going solo and not seeking professional advice, you could be paying extra money for a policy which may not be suitable to you.