Insurance – Direct or via a qualified adviser?
It’s a life full
of
choices, and
today there are more than
any. But are you falling for
the
marketing hype?
The fact is, on daytime television we are constantly bombarded with
the option to call
for
quick and easy
applications with no
medicals. But what does that mean to you?
The advantages and disadvantages of Direct Insurance vs. a Financial Adviser
Speed of implementation
With direct insurance, there is no doubt that it
is quicker.
There is a reason for
that! Consulting
with a professional
adviser can take about an hour.
The adviser then
needs
to
research solutions for you and prepare
a report outlining
these. Paperwork needs to be completed, then your application needs
to
be assessed by an
underwriter.
No Medicals
With no medicals, the direct insurer has
no option other than to price higher in anticipation of
risks unknown. Also, many direct insurers
hide behind a clause stating that ‘claims
due
to pre-existing conditions
are not valid’.
On the other hand,
products mostly recommended by
an adviser will be fully underwritten
at application stage allows you the peace of mind
knowing that you are covered
in full when a claim is made.
Features
Direct or industry
funds generally
offer basic cover, without as many extra
benefits available. Retail
products tend to have a
wider range of
features that can be tailored to your own
individual preference and budget.
Cost
Direct cover is normally fully funded from your
own cash flow, and often can be more expensive than an adviser sourced
product. However,
single premiums can often
be cheaper (typically Group Life cover).
An adviser can work with you, and look at ways of paying
for your cover via superannuation, and
using various linking options that reduce the overall cost to you.
Tax Effectiveness
Most direct insurance premiums,
as they are funded from cash flow alone are only tax
deductible for
the
income protection component. An
adviser can show you how to
pay
for your
insurance with multiple possible benefits depending on your
circumstances.
Guarantee of payout
Direct insurance normally offers no guarantee that a
payment will be made, as often these
policies are underwritten
at
the time of claim. (See ‘No Medicals’ above). A retail offering is generally underwritten
up front, which
means that the payout is guaranteed
providing that there
are no pre-existing medical conditions
that were intentionally not disclosed.
Do you need a financial adviser to talk to you about your insurance options? Our in-house adviser can come to you and explain the available options to you.
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