I saw an ad for insurance company NobleOak the other day which really made my blood boil. It’s the one where the guy says that with most life insurance you’re ‘being sold an illusion’. The ad claims that life insurance through NobleOak is 20% cheaper than if you buy through an adviser or direct with an insurer.
They highlight that they only offer fully underwritten life insurance, which is tailored to you. Then the ad goes on to say that they offer ‘no advisers, no surprises’ and suggest that if you pay for financial advice you’re just paying for ‘bull’!
This ad totally undervalues what advisers do for their clients! What’s more, it makes it seem like we are an unnecessary part of the life insurance process and that you can get exactly what you need straight from NobleOak.
So, I decided to test them out.
I called the service line and went through the process of applying for life insurance.
- When I asked the consultant what amount of life insurance and TPD cover he thought I should get, he told me it was up to me to choose a figure. I asked if $100,000 sounded right. He said it was up to me. (Because the consultant on the end of the line is not an adviser, they are not legally allowed to provide personal advice like telling you how much cover you personally need or what type of cover is most appropriate for your individual circumstances.)
- I asked what life insurance cover was for. He told me that life insurance could used to pay off your mortgage and any other debts. He did not tell me about the other types of cover that I could get (eg: trauma or income protection) or tell me how they would benefit me.
- I asked about whether my premium would go up each year. The consultant explained that because they offer stepped premiums, the cover would be cheaper initially and go up over time, in line with my age.
- Finally, I asked about what happened when I needed to make a claim. The consultant told me there was a 1300 number I could call.
All up, the result of my call was a quote for $100,000 of life insurance and TPD at $29.75 per month.
So, how much would it cost if the same type of client came to see me for life insurance? The premiums for the products I use vary between $25 per month to $32 per month. In other words – roughly the same price!
Even if you do end up paying a little bit more, here’s what you’re actually paying for:
- An adviser will go through a deep fact find process to understand exactly what sums insured you require.
- An adviser will work with you to understand your goals – financial, lifestyle and family – so they know exactly what you would need taken care of if something happened to you.
- An adviser will do research to make sure the product/s selected are appropriate for your individual circumstances – not just the type of cover, but also which insurer has the most suitable terms for your needs.
- An adviser can offer you different ways of paying your premium – not just stepped.
- An adviser will manage the claims process for you from start to finish and on average, the turn-around is significantly quicker. Ie: the claims I have are paid well under 2 weeks for income protection, and as quick as 48 hrs for trauma.
- An adviser will conduct annual reviews to ensure that the plan in place is still relevant.
The other, crucial difference when it comes to the cost of your premiums is your health. When you apply for life insurance, the insurance company will ask you questions during underwriting to assess your risk. If you have an existing medical condition, such as diabetes or mental illness, the insurance company may decide to add a ‘loading’ to your premium, meaning the cover will cost more. Or, they will exclude you from making a claim if it is related to your existing illness or decline to accept your application.
When you work with an adviser, we conduct pre-assessments, so if you do suffer from existing medical conditions we can get you the most suitable cover available, with the lowest possible loading. We shop around, because not all insurers will offer you the same rate.
Sadly, with NobleOak, you are getting an offer from just one insurance company. I tested this by calling NobleOak a second time and running through the process as someone who has diabetes. NobleOak were only able to offer me life insurance, not TPD, with a loading of 300%. So, not only could I not get all the cover that I wanted, but it was at a rate that is double the cost of cover that I have been able to secure for my client!
In summary – yes, the financial adviser does get paid by the insurer by way of commission, but the client is not disadvantaged by price or service and they receive expert advice in the process. Most importantly, they receive assistance with their claim, rather than a 1300 number.
With cover that costs pretty much the same and expert advice thrown in, I know which option I would choose!!