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ASIC and APRA recently released insurance claims data which showed that claims on individual advised insurance products are accepted and paid out more often than individual non-advised or direct insurance products. That’s pretty compelling.
‘Advised’ insurance means insurance products that are recommended through the provision of personal advice by a financial adviser, and these could be offered within or outside superannuation. ‘Non-advised’ insurance products are bought directly from the insurer either within or outside superannuation, with no personal financial advice or only general advice provided. Individual insurance means policies that are subject to the underwriting of the individual before being put in force.
The above table shows the percentage of insurance claims ‘admitted’, which refers to claims where the full benefit the claimant was entitled to in terms of their policy’s contract was paid (or payable). Total and Permanent Disability (TPD) insurance had the greatest difference between advised and non-advised claims, having 20% more of advised claims paid out than non-advised claims. Advised Death and Income Protection claims also had a higher proportion paid than non-advised claims.
In its report, APRA suggested that this variance may be due to advisers assisting their clients to understand what is covered by their insurance products and discouraging them from making claims that wouldn’t be accepted.
ASIC also recently released a separate report which revealed that a third of people found group insurance inside superannuation (the default insurance offered by super funds) to be complex and difficult, as they felt “confused”, “overwhelmed” or “uncertain” after trying to enquire with their super fund about their insurance. In contrast, people who obtained insurance via a financial adviser had a better understanding of their insurance.
Working with an adviser to develop your risk protection strategy can provide the following benefits:
As you may be aware, insurance advisers are typically remunerated by commission paid to them by insurance product providers. At Hewison Private Wealth, we do not subscribe to commission payments. Our charges are fee-based reflective of the work entailed and completely transparent.
If you have any queries regarding personal insurance, the Risk & Insurance team at Hewison would be delighted to assist.
Hewison Private Wealth is a Melbourne based independent financial planning firm. Our financial advisers are highly qualified wealth managers and specialise in self managed super funds (SMSF), financial planning, retirement planning advice and investment portfolio management. If you would like to speak to a financial adviser on how you can secure your financial future please contact us 03 8548 4800, email info@hewison.com.au or visit www.hewison.com.auPlease note: The advice provided above is general information only and individuals should seek specialised advice from a qualified financial advisor. The views in this blog are those of the individual and may not represent the general opinion of the firm. Please contact Hewison Private Wealth for more information.