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Following the presentation to the media by Kenny Rabson, Deputy CEO of Discovery Life, exploring the myths and realities of direct life insurance, articles have been published that discuss the research findings and also express the views of direct insurers.
The Business Day article, Direct Life insurance is ‘more expensive’, discusses the research findings which show that direct insurers may not be able to sustain lower premiums or offer and guarantee similar comprehensive benefits offered by firms using intermediaries, amongst other key research findings.
The Sunday Times article, Beware of all the myths, highlights the concern that consumers are not aware of the benefits, myths or realities of using a broker or going direct.
In this article, the following myths and realities about direct insurance are discussed:
- Myth 1: Direct insurance is cheaper than buying life insurance through a financial adviser. Reality: On average, direct insurers are 9% more expensive than insurers who use intermediaries to sell their products.
- Myth 2: Financial adviser commission inflates premiums compared to direct insurers who do not pay commission. Reality: All insurers have new business acquisition costs which impact the premium.
- Myth 3: Consumers will be able to maintain direct insurance premiums over the long-term. Reality: Limited premium guarantees expose consumers to the risk of unaffordable premium increases.
- Myth 4: Direct insurance offers comprehensive benefits. Reality: Direct insurers do not incorporate the latest benefit innovations in their products, or many core features that are prevalent in products sold through intermediaries.
- Myth 5: Consumers do not need financial advice as information is readily available. Reality: A financial needs analysis requires specialised expertise and customised software and is necessary to best understand each client’s insurance needs.
- Myth 6: Financial advice is the same whether a call centre agent or qualified financial adviser provides it. Reality: Certified Financial Planners are qualified and keep up to date on product and industry developments through continuous training.
- Myth 7: Claims payouts from direct insurers are transparent and certain. Reality: Claims are more often rejected with direct insurance companies
- Myth 8: Intermediaries do not add real value to consumers. Reality: Intermediaries perform important tasks for consumers that add significant value.
The articles, as well as the research paper can be found by clicking here.
Prestige Wealth Managers (Pty) Ltd
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Address: 47 Lakefield Avenue, Lakefield, Benoni, 1501
Postal: P.O. Box 1448, BENONI, 1500