While the remuneration structure of life insurance product comparison websites (PCWs) mostly receive a similar commission level to qualified financial advisers, they do not offer a similar level of service to advisers, according to Rice Warner.
The research house’s latest analysis found that although several websites compared product features, the focus for product differentiation was predominately price.
“The inadequate link between price and product features is likely to result in consumers overlooking what is being offered for the price they pay,” the analysis said.
“Without comparing the product features (which can be difficult and time consuming), consumers may rely on product names and prices to differentiate products.”
Rice Warner noted that consumers tended to need most assistance at the claim stage, however no information was given by the PCWs on how consumers would be helped if they needed to lodge claims.
“This is a clear disadvantage compared with using a financial adviser who is expected to help their clients through the full cycle of the life insurance policy,” the analysis said.
“A further limitation of PCWs is that they don’t allow comparisons with all types of insurance products. Most PCWs exclude direct insurance policies which have different features such as the ability to obtain cover with reduced underwriting requirements.”
PCWs were also found to have great variations in terms of the recommendation on the insurance level needed for a consumer.
“Financial advisers will provide their clients with a tailored recommendation for insurance needs which is likely to set a level of cover which better meets the needs of the individual,” Rice Warner said.
Rice Warner said that the other type of cover not considered by PCWs was insurance offered by superannuation funds.
“Overall, insurance in superannuation is an efficient way for most Australians to obtain life insurance. It is usually cheaper than similar cover held outside superannuation and can be obtained without or with minimal underwriting requirements,” it said.
