Alternative channels to accessing life insurance not involving a financial adviser present a key risk to Australians taking up policies as there is little to no advice being given.
“Anyone can go online and take out an insurance policy – but is it exactly what they need, are there any pitfalls?” AMP head of product on-sale John Ashton told InvestorDaily.
“The value of advice can’t be underestimated because it’s the basis on which people have a greater appreciation of, not only insurance they’re taking out but more importantly, having someone sitting down with them to explain to them exactly what insurance means and what their needs are.”
The array of results for life insurance online through a simple Google search demonstrates the ease of buying policies.
Another alternative channel includes over-the-phone – as endorsed through television commercials – but such methods are uninformed, Ashton said.
“There are different means now by which people can take out insurance but it’s about what the advice process affords people,” he said.
“We know there are contracts you can take out direct these days that have clauses in them around pre-existing conditions.
“Do clients really understand that when they’re taking it out themselves online?”
Going through the advice process is the absolute ideal way – particularly when taking out policies such as income protection – as the required documentation can be fairly extensive, Ashton said.
“Most importantly, sitting down and discussing exactly what your income needs are is key to any good plan that gets put in place by an adviser,” he said.
Australians who seek insurance online generally want to keep things as simple as possible, but that did not mean reading documentation can be disregarded, he said.
