Direct Life Insurance: The Pros & Cons

Direct insurance is life insurance that you buy or obtain directly from an insurer, usually over the phone or internet. This method of going “direct” bypasses the need to see a financial broker or advisor, giving you complete control.

There are many advantages of buying a life insurance policy direct. These include:

Quick online application – pay by credit card and you?re covered straight away.
No medicals or blood tests required. However, expect a lot of medical questions in the application process.
Some policies accept people who can?t get cover anywhere else due to ill health, or the self-employed with no access through a superannuation fund.

If you want to increase your level of cover to suit those lifestyle ?big events?, such as having a baby or taking on a higher mortgage, you can easily do so without having to answer more medical questions. This is called Guaranteed Future Insurability, a handy feature of direct life insurance, particularly if your health has worsened since you first took out the policy.

Speaking of health, the benefit will pay your sum insured if you are diagnosed with a terminal illness which normally means you have less than 12 months to live.

Your family will also appreciate the insurer?s Funeral Benefit which is a portion of the claim paid quickly while the insurer assesses the remaining claim. It means your loved ones will be able to cover your funeral costs.

But you do need to be aware that…

The nature of buying direct means that you are bypassing the advice that you would otherwise receive from your financial planner. In the absence of advice, product education is up to you. And sometimes the clichÃ© that you don?t know what you don?t know holds true.

Direct life insurance generally provides cover from $100,000 to $1 million. It?s up to you to determine what level of cover would provide for your family or dependents in the event of something happening to you, the policy holder.