We have all seen the recent explosion of TV advertisements for companies marketing over the phone or internet insurance but how does it differ from personal insurance cover that Financial Advisers recommend…
The first thing to point out is that the insurance provided over the telephone and internet is direct insurance, meaning you deal directly with the company itself whereas financial planners provide personal advice and recommendations in consultation with the client – it is the personal advice which is often the most invaluable, together with the ability to research and compare different providers.
The other thing which the ads often point out is the fact many providers offer “No medicals, no paperwork and low cost cover from as little as a dollar a day”.
This may seem all well and good but caution does need to be exercised. No upfront medicals or paperwork means that come claim time- this is when such information is required. What this means is that your eligibility for insurance is often only actually established once making a claim. In contrast to this, insurance facilitated through a financial planner would require you to complete a personal statement and medical questionnaire upfront- which in some cases may require you to sit a medical test HOWEVER… If they deem you to be insurable then you have the peace of mind of being covered and you avoid the situation of paying for cover you may not actually be eligible for or going through an often underwriting process at exactly the time when the insurance payout is needed.
The question I often ask clients who are thinking about the direct insurance is whether they would feel comfortable having a doctor provide a prognosis on a client’s health over the phone. One thing I thought may be of interest to readers – is that in my research in writing this blog I called two of the main providers of direct insurance to get a quote for myself. The interesting thing is that although the adverts lead us to believe that cover is extremely well priced, in actual fact a quote on myself showed that both those providers were above 20% more expensive than a couple of quotes that would have been issued through a Financial Planner. It is for these reasons that i still believe in the value of face to face.