Buyer beware – Protect yourself and your family

04 Apr 2013

By Shadforth Financial Group

If you have been watching TV lately you would have noticed an increased level of advertising for direct insurance. The need for personal risk insurance is extremely important, and these ads go a long way to increasing its awareness.

I recently read an alarming statistics that almost two thirds of Australians (65.3%) do not have adequate life insurance. For someone who has seen what not having a personal insurance policy can do to a family first hand, this statistic staggers me.

This awareness is great, however I have a number of concerns with the type of products some of these companies are pushing, possible conflicts of interest in doing so, and how I believe they are misleading the public.

Most of these products are of the no-frills variety, supposedly cheaper and easier to obtain by just calling a number and answering a few simple questions. What can go wrong?


I was intrigued at what exactly they offered for someone seeking income protection. So, after answering a few simple questions, I was offered one of their house products and told that I was covered under the policy until age 65.

However, only after enquiring further was I told that if I was to suffer an injury or illness, the actual benefit period was only for five years and not until I turned 65 years of age. Talk about stretching the truth!

Further investigation found that the policy did not cover mental illness or depression, two of the major types of claims that should be covered. After receiving the quote it also turned out to be more expensive than some competitor policies.

So although these advertisements improve the awareness of personal insurance, their underlying products do not hit the mark.

By seeing a specialist risk adviser, rather than purchasing insurance directly, you get:

  • High quality personal advice: A specialist will go over the entire process with you, not just sell you a product off the shelf. They will look at the best structure to hold your insurance in, discuss the type and level of insurance you need taking into account your debt levels, family situation and stage in life. They will also provide you with an ongoing review to ensure what you have is suitable to your ever changing personal circumstances.
  • Underwritten policies: A specialist will make sure your policy is underwritten at the application stage, not at claim time when proving medical history is the last thing you want to do.
  • Better products: A specialist has access to a better product range and competitive pricing. With direct insurance there is limited product choice, restrictive definitions, little ability to modify cover to meet your specific needs and often the benefit is capped, meaning you often won't get an adequate level of protection.

If these products increase the number of lives insured in Australia then it is a positive outcome, but be aware of the pitfalls, read the fine print and ask all the relevant questions.

Better still, contact a financial adviser who, in conjunction with a specialist risk adviser, will run over the policy with a fine tooth comb. Also get them to compare this product to one they can obtain for you. I think you will be surprised!

So if you, a relative or a friend help make up the 65.3% of under-insured Australians, don't hesitate to contact Shadforth Financial Group to discuss getting the right level of protection.

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