‘Advised’ insurance means insurance products that are recommended through the provision of personal advice by a financial adviser, and these could be offered within or outside superannuation. ‘Non-advised’ insurance products are bought directly from the insurer either within or outside superannuation, with no personal financial advice or only general advice provided. Individual insurance means policies that are subject to the underwriting of the individual before being put in force. 

The admittance rate by cover type and channel for the 12 months to June 2020: 

The above table shows the percentage of insurance claims ‘admitted’, which refers to claims where the full benefit the claimant was entitled to in terms of their policy’s contract was paid (or payable). Total and Permanent Disability (TPD) insurance had the greatest difference between advised and non-advised claims, having 20% more of advised claims paid out than non-advised claims. Advised Death and Income Protection claims also had a higher proportion paid than non-advised claims. 

In its report, APRA suggested that this variance may be due to advisers assisting their clients to understand what is covered by their insurance products and discouraging them from making claims that wouldn’t be accepted.  

ASIC also recently released a separate report which revealed that a third of people found group insurance inside superannuation (the default insurance offered by super funds) to be complex and difficult, as they felt “confused”, “overwhelmed” or “uncertain” after trying to enquire with their super fund about their insurance. In contrast, people who obtained insurance via a financial adviser had a better understanding of their insurance.  

Working with an adviser to develop your risk protection strategy can provide the following benefits: 

1. An educated professional who understands everything about risk protection strategies and can answer your queries. 
2. A tailored strategy that looks at your individual goals and objectives and determines the best way to structure insurance for you personally. 
3. Access to independent research of the various insurance providers and knowledge of the various types of personal insurance products. 
4. Assistance with insurance applications and alterations including the medical underwriting process. 
5. Reviewing your risk protection strategy regularly to ensure your arrangements remain appropriate as your circumstances change over time.  
6. Assistance in the event of an insurance claim. 

As you may be aware, insurance advisers are typically remunerated by commission paid to them by insurance product providers. At Hewison Private Wealth, we do not subscribe to commission payments. Our charges are fee-based reflective of the work entailed and completely transparent. 

If you have any queries regarding personal insurance, the Risk & Insurance team at Hewison would be delighted to assist.