At Income Solutions we have nominated “Knowledge” as one of our core values. We developed our values to align with our service offering to clients, but also to be applied to our team members. With this in mind, we are continually broadening our knowledge and one such example is the personal insurance claims processes webinar I recently attended.

We get it. Insurance is just one of those things you don’t want to include in your budgeted expenses. On the flip side, when something goes wrong with our health, our car, our homes – it’s the first thing we run for. This is true also for personal insurances. We often forget that our most important asset is ourselves and our loved ones; it’s not physical possessions. At Income Solutions, we believe in insurance, and we believe insurance should start with your personal protection needs, and work outwards from that point, tailored to your specific individual circumstances and goals.

The webinar commented on insurance data on ASIC’s Moneysmart website, particularly focusing on statistics for claim outcomes based on whether the policy holder was receiving financial advice or dealing directly with the insurance provider, unassisted by a Financial Adviser. In this day and age, it is easy to self-source, sometimes without even leaving the comfort of your own home. So, does the knowledge provided by seeking professional advice lead to a better outcome?

There are 4 main types of personal insurance cover, and using ASIC Moneysmart descriptions they are:

• Life cover (sometimes called death cover) – Financial protection for your loved ones when you die.
• Income protection (sometimes called salary continuance) – Protect your income if you’re unable to work.
• Total and permanent disability (TPD) insurance – Insurance cover for a permanent illness or injury.
• Trauma Insurance (sometimes called critical illness cover) – Insurance for a critical illness or serious injury (as defined by the policy).

Let’s have a look at life cover for 2023 using ASIC’s Moneysmart Life insurance claims comparison tool and looking at insurance provider TAL:

Purchased through: Financial Adviser or Directly through product provider	Claims Accepted Rate	Average Claim Time (months)	Disputes per 100,000 lives insured	Policy cancellation rate (by either TAL or the policy holder)
Financial Adviser	97.1%	1.2	9.7	17.6%
Purchased Directly	86.4%	3.0	25.3	13.5%

 

As another example, let’s have a look at the 2023 claims data for Income Protection insurance.  We’ll look at TAL again: 

Purchased through: Financial Adviser or Directly through product provider	Claims Accepted Rate	Average Claim Time (months)	Disputes per 100,000 lives insured	Policy cancellation rate (by either TAL or the policy holder)
Financial Adviser	93.7%	1.2	200.3	14.1%
Purchased Directly	83.8%	2.3	581.9	18.6%

 

While this data is not taken from a large results pool, and there are some insurance companies that do not collect data on this statistic, the data is published from a reliable Government source via the ASIC Moneysmart website.   The take outs that I can see: 

Purchasing insurance cover under the advice of a Financial Adviser results in: 

• More claims being accepted 
• Less time waiting for claims to be paid 
• Less disputed claims outcomes 

Interestingly, it shows the jury is out on whether more policies are cancelled for clients receiving advice than for those dealing directly to the product provider.   My experience across 35 years in the Financial Planning industry is that people who are not receiving ongoing financial advice tend to have a set and forget attitude, always intending to review but never quiet getting to it.   If you are paying an ongoing advice fee, you will receive a comprehensive and personalised review of your circumstances, insurances, and investments at least annually (depending upon your service agreement the review may be more frequent).  You don’t need to remind yourself to pay attention, your Financial Adviser will bring it to your attention.   And that aspect alone, in my opinion, is the value of advice.  

 

Written by Alison Adams

 

 

 

 

 

Reference:  https://moneysmart.gov.au/how-life-insurance-works/life-insurance-claims-comparison-tool