News eDaily21 Jun 2017

Australia:84% of Aussies choose life cover based on premiums

21 Jun 2017

More than eight in 10 (84%) Australians purchase life insurance based on the cost of premiums, according to life insurer NobleOak.

NobleOak's survey of more than 1,000 consumers found the cost of premiums trumps other key factors such as product features (63%), claims reputation (55%) and service levels (33%), reported Financial Standard.

What's concerning is that 52% of consumers buy life insurance or income protection cover online due to convenience, but don't understand what they are trading off with some direct policies, said NobleOak chief executive Anthony Brown.

Life cover sold direct is often heavily marketed as affordable, easy-to-buy, with limited health questions, no health checks or blood tests, he added.

Consumers are also more likely to switch to new providers based on lower premiums (36%) compared to finding superior products (18%) or better services (7%).

"This shortened application process can result in problems at the time of claiming when customers may need to answer more detailed health questions and supply a report from their doctor.

"Not only does this slow the process down at a time when a customer is emotionally distressed, but it could reveal a pre-existing condition with the claim being denied," Mr Brown said.

Cover available through a financial adviser on the other hand is fully underwritten, but requires a multi-page statement of advice and product disclosure statements consumers often don't read or understand.

A policy that has limited underwriting at the time of purchase means the insurer asks only a few health and lifestyle questions, but will complete the underwriting process if a claim is made. Cover bought through superannuation funds is also more likely to have limited or no underwriting, Mr Brown added.

 

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