In some ways getting personal insurance advice is like getting the advice of a professional builder or architect when doing renovations on your home. You can choose to get by without it. You can choose to do it yourself. But the consequences of getting it wrong can be serious, and the outcomes would be much better with professional help. There are many valuable ways a professional adviser can help with your personal insurances.
For the purposes of this article, “personal insurance” refers to life, disability and income protection insurances. These insurances are quite varied and complex, and involve potential claim amounts of hundreds of thousands into the millions of dollars. Hence the importance of getting it right.
How can a professional adviser help with your personal insurances?
- They can help you to avoid products with lots of claims restrictions. Some superannuation fund insurances have “hidden nasties” in the fine print that prevent you from claiming. Similarly for many products sold via TV advertising and “affinity” programs. Most advisers can unearth the fine print nasties for you, and know which products to avoid.
- They can help you get the right type of insurance for your situation. For example “Total & Permanent Disablement (TPD)”, “Terminal Illness”, “Trauma”, and “Income Protection” are all quite different. Unfortunately many people get confused by these, and then find out at claim time they’re not actually insured at all for their situation.
- They can make sure you have the right amount of insurance. This is usually done via a broader analysis of your financial circumstances, and an understanding of what typically needs to be provided for by personal insurance. Unfortunately there have been plenty of people receive an insurance claim cheque promptly and in full, only to then realise the insured amount was nowhere near enough.
- They can help you choose the best options within insurance types. For example income protection can have 5 different waiting periods, 3 different benefit periods, agreed vs indemnity, stepped vs level, inside super vs outside super, standard vs advanced. An adviser can recommend which mix of options is best suited to your specific circumstances.
- They can stop you from wasting money on insurances you don’t need or can’t use. For example some people without dependants may not need life insurance at all, yet they may be paying for it in their superannuation fund. Some make the mistake of having two different income protection insurance policies assuming both will pay at the same time. In many cases they will not, and one policy is just wasted money. An adviser can assess your situation to check if it is safe and prudent to cancel particular insurances.
- They can provide ongoing advice about the continued suitability of your insurance products. Over time product features or claim definitions can become out of date, and there may be better options emerge in the market. An adviser can alert you to these better options, and assess whether it is possible and advantageous for you to switch.
- They can provide ongoing advice about changing your insurances to stay up to date with your personal circumstances. For example many people may need to update their income protection as they progress in their career. Life insurance may need to increase if you get a bigger mortgage or have more children.
- They can save you money. Most advisers can provide their clients with access to the insurers’ better quality, lower cost products, compared to those the insurers sell direct to the public. Advisers also know the best ways to structure your insurances from a tax perspective, saving you even more money.
But what of the common refrain “insurance advisers are just product salespeople tied to the insurance companies”? In the past that may have been true. And there still are insurance and superannuation company employees who are pure salespeople for their employer’s product only. However there has been massive change in financial advice regulation in recent years, and the professional advisers of today are very different.
Professional advisers have to meet strict licensing and training standards, and have a legal obligation to always act in the interests of their clients. They need to consider a range of different products that may be potentially suitable. They need to provide you with a personalised document outlining their recommendation and why it is in your interests. They need to provide you with upfront information confirming their licensing details, and disclosing any control or ownership by insurance companies.
ICT Wealth is proud to be one of these new breed of professional advisers.
If you would like some help with your insurance requirements, please send us a message.