Differences when purchasing Life Insurance directly, through advisers or within a super-fund.
Welcome to NobleOak’s new video providing insights on Life Insurance.
One of the questions we get asked regularly is: What is the difference between purchasing Life Insurance directly, through advisers or within a super fund?
Buying direct: Buying Life Insurance directly means purchasing the insurance direct from the insurer without personal financial advice tailored to you. This means that any advice you receive will be general advice that does not take into account your objectives, financial situation or needs.
Some direct Life Insurance can be fully underwritten and some may not be. If it is not fully underwritten, it may be quick to apply for, but the types and levels of cover could be limited. There will also likely be exclusions for pre-existing conditions.
If you’ve decided to source your Life Insurance product directly through a life issuer, it’s worth doing your homework to check exactly what you are signing up for….and remember, it’s important that you consider the PDS. Comparison sites such as Canstar and Finder can be helpful in showing the differences between policies. Direct Life Insurance can be very accessible and affordable for those that know how much and what cover they require, without paying commissions for financial advice.
Through a financial adviser: Purchasing Life Insurance through an adviser can suit people who are unsure what type and amount of cover they need. The adviser may work with you in completing what is called a ‘statement of advice’ or SOA. With this information, the adviser’s role is to source the best cover for your needs and budget. They can essentially do your homework for you. The insurance is usually fully underwritten and high cover amounts can be obtained. However, it is important to know that purchasing cover through an adviser often comes with financial adviser fees built into the premiums. These fees are often around 60% of your first year’s premium and 20% of your annual premium each year from the second year for the life of the policy.
Inside your super: Many people have their Life Insurance as part of their super fund. This will sometimes be referred to as ‘Group Life Insurance.’ Many super funds have ‘default’ insurance cover, meaning they include cover you did not select. Only Life Insurance, some TPD insurance and Income Protection can be included in your super – not Trauma cover.
Life Insurance through a super fund involves regular deductions which are passed on to the Life Insurance company. With Life Insurance through your super, cover can be limited and in the event of a claim, the payout would be made to a trustee. This typically leads to a more complex claims process, and depleted super savings. The upside is there can be some tax advantages (but we are not tax advisers and you should speak to your accountant about tax).
At NobleOak, we offer Life Insurance directly to you, without adviser fees or high built-in overheads. Our products are fully underwritten and our Life, TPD and Income Protection cover can be purchased within an SMSF if required. We also offer Trauma cover. And because you’re buying direct, you can save on average 20% on your premiums compared to other insurers.
If you would like to know more about Life Insurance, please refer to the “Need help” section of NobleOak’s website, or other websites, such as ASIC’s MoneySmart site. If you would like to find out how much cover you need to protect your family use our free online calculator. To see the benefits of taking out cover with NobleOak vs other direct insurers and cover inside your super click here.