Home > Life Insurance Research

Direct Life Insurance False Perceptions

Insurance purchased directly from a life insurance company is more expensive, a fact that may be contributing to the perception that life insurance in general is too expensive.

Q. Where did you purchase your stand alone life insurance policy?

• 43% of all stand-alone life insurance policies are purchased directly from an insurance company.

Life insurance sold directly to consumers is often more expensive because the selling process has limited to no health and medical questions and no medicals so the insurer has limited understanding of the health risk of the policy holder. By avoiding underwriting the insurer cannot assess a policy holder’s level of risk and will protect itself by charging a higher premium. Many consumers are enticed with the simplicity of direct insurance and policies are promoted heavily via TV, radio and direct mail.

Buyers not shopping around

Not enough Australians compare life and income protection insurance premiums when purchasing for the first time or when renewing policies, contributing to their perception that insurance is too expensive.

Q. When you took out or last renewed your life/income protection insurance policy did you obtain comparative quotes? (Base: Purchased stand alone life insurance policy.)

• For life insurance, about one third (36%) obtained comparative quotes at the last renewal or when purchasing. Males and those who are self-employed were more likely to do so.
• For income protection insurance, about one half (45%) obtained comparative quotes at the last renewal or purchase.

Life Insurance Quote Income Protection Quote