Where To Run For Cover

In an economic environment where many Australian's are experiencing a decline in savings and income, the trend line for life insurance purchase is on its way up. In recent months, insurance provider ING has seen an increase of roughly 15% in their growth rates, up to 25% from an annual average of 10-12% for the past ten years.

Direct insurance providers, who offer basic life insurance policies that don't require their clients to go through an underwriting process, have shared in this growth. But, according to Lifebroker online insurance brokerage employee Chris Eades, simpler does not necessarily mean cheaper.

Underwritten life insurance policies evaluate their customers based on risk. The lower the risk a potential customer presents to the provider, the lower their premiums will be. Direct insurance providers, meanwhile, often skip the questionnaires and medical evaluations involved in underwriting. Instead, they charge a higher flat rate for all of their customers.

In addition to being comparatively cheaper, underwritten life insurance products usually come with fewer limits on policy amounts and the assistance of a financial adviser. So, though direct life insurance does have a place for certain markets and those looking to supplement existing coverage, it is not necessarily the best fiscal option for everyone.

Click to read the full Sydney Morning Herald article below: