Blog

Data from Australia’s financial regulators has confirmed that advised clients are better off when securing a successful life insurance claim outcome, compared with the unadvised.

Data, from the Australian Securities and Investments Commission (ASIC) and the Australian Prudential Regulation Authority (APRA), shows that between 1 January and 30 June 2017, 90% of all life insurance claims were paid in the first instance, with 97% of death claims being paid, 84% for total and permanent disability claims (TPD) and 87% for trauma claims.

However, the data revealed very different outcomes depending on whether people purchased life insurance directly from an insurer or through an adviser. Where a person was advised, 98% of death claims were paid compared to 88% in the non-advised channel, and 86% of disability insurance (TPD) claims were paid, compared with 67% in the non-advised channel.

In terms of disability income insurance, also known as income protection insurance, those who were advised enjoyed 95% of their claims being paid, compared to 83% in the non-advised channel.

It’s a similar story with the Financial Ombudsman Service’s annual review figures for the 2017 financial year, which reveal that 71% of consumer disputes relating to income stream risk products came from products which were sold directly through the insurer, while just 7% of disputes were from income stream products sold through a financial adviser.

Similarly, 68% of  life insurance disputes for that year came through the direct sales channel, compared to 8% through the advised channel.