What Is Advised Life Insurance?

10 August 2017
Finding the right financial protection for you and your family can be a daunting process. If you’re struggling to find the right policy, then consider advised life insurance.

There are two kinds of life insurance: direct life insurance and advised life insurance.

Advised life insurance is the less common of the two; Canstar currently rates 12 advised life providers compared to 30 for direct life. But what exactly is advised life insurance?

Advised life insurance is life insurance that you obtain through the use of a specialised financial adviser. Some people prefer advised life insurance because it removes a lot of the confusion when it comes to choosing a policy; getting professional advice helps narrow your options to find a policy that properly suits your specific requirements. Getting advice on an insurance policy can also eliminate the risk of being underinsured or paying more than you should in premiums.

Advisers will typically take you through your insurance needs in person and will ask about your budget, personal information, living situation, information on your family and more. To save time, you can also speak to an adviser over the phone.

According to the Association of Financial Advisers (AFA)’s CEO Brad Fox, insurance policies taken out through an adviser “pay out more claims, have better contract definitions and fewer complaints than the alternative channels of group and direct life insurance.”

What does advised life insurance cost?

Overall, advised life insurance premiums have remained relatively stagnant over the past six years. The cost of each advised life insurance policy is different, and will depend on the following things:

  • Your current health and medical history
  • Your occupation
  • Your hobbies
  • Whether you’re a smoker or non-smoker
  • Your gender and age

Historically, Canstar has found in our Star Ratings Research that premiums have been cheaper for advised insurance policies for blue-collar employees. The table below shows the cost of both advised and direct income protection insurance for 27-year-old non-smoking males and females in 2016.

Average monthly cost ($)

for $3,125 monthly cover

for 27-yo Male

Average monthly cost ($)

for $3,125 monthly cover

for 27-yo Female

Occupation Direct Advised Direct Advised
Accountant 42.51 29.79 52.27 41.98
Clerk 44.42 36.84 54.89 52.63
Registered Nurse 57.39 64.27 71.23 91.70
Electrician 63.07 65.06 78.38 92.83

Source: Canstar. Based on products assessed by Canstar for Direct and Advised Income Protection Star Ratings 2016.

Advised life insurance vs direct life insurance

Direct life insurance is both similar and different to advised life. It is similar in that you need to provide the same information when applying for a policy, but the method of applying can be very different. Most direct life insurance policies have no involvement with financial planners; you buy the insurance directly from insurance companies or financial institutions.

One exception to this rule in the current market is NobleOak, which offers fully underwritten, tailored life insurance directly to consumers without the use of a direct reseller or financial advisor – a sort of ‘hybrid’ between the two. This is not common, however, and in most cases you’ll have to make a choice between one or the other.

In most cases direct life insurance it is very much ‘off the shelf’ insurance, as it is easier to apply for, requires less medical information and applications can be completed in minutes from the comfort of your own home. It has made life insurance much more accessible for everyday Australians as a result.

In terms of price, there is no real advantage or disadvantage to using advised life insurance over direct life insurance, although NobleOak state that its method results in premiums that are 20% lower on average than other major insurers when purchased through an advisor or directly through that insurer. Advised life insurance tends to be cheaper for blue-collar jobs like accountants and retail staff, but is often more expensive for more specialised roles like nurses and engineers. This is not always the case, however, and it will really come down to the information you provide in your application.


Related article: Women Pay Less For Insurance 

According to AFA president Marc Bineham, direct life insurance has “inherent weaknesses” that advised policies do not.

“By seeing a financial adviser, people have the benefit of receiving an adviser’s expert advice on their specific life insurance needs,” he said.

“Life insurance advisers provide greater certainty to their clients in two ways. Firstly, advised retail life insurance is underwritten at application time, rather than at claims time as is often the case with the other forms of life insurance. And secondly, financial advisers manage their clients’ claims.”

However, this won’t be too much of a problem if you familiarise yourself with the necessities of life insurance. If you’re aware of the common exclusions, definitions of pre-existing medical conditions and what is and isn’t covered by different policies, then you can save yourself plenty of time by applying for direct life insurance.

To help you determine what type of life insurance policy is best for you, you can read up on and compare both of them using the Canstar website.

Pros and cons of advised and direct life insurance

To summarise the key advantages and disadvantages of advised and direct life insurance, consult the table below.

Pros and cons of advised and direct life insurance
Advised life insurance Direct life insurance
  • Advisers can simplify complex insurance jargon
  • Advisers can find a better policy that suits your needs
  • The cost of advised life insurance is roughly the same as direct life
  • Advisers can ensure that your application is complete and that it won’t jeopardize any claims you make in the future
  • Advisers can ensure that you aren’t overpaying or underinsured
  • Advisers can provide you with policies you can’t get online
  • It is much simpler to apply for
  • You can apply in minutes at a branch, over the phone or online
  • You have more options available
  • The questions are easy and little to no medical information is required
  • You get immediate death cover straight away upon acceptance
  • You know straight away if your application has been successful
  • Fewer policies are available – Canstar only rates 12 advised life providers, compared to 30+ for direct life
  • You have to pay for the adviser’s services
  • The process can be much longer
  • The cost of direct life insurance is roughly the same as advised life
  • It has a ‘one shoe fits all’ approach that could leave you underinsured or overpaying
  • You have to sort through more policies to find the right one
  • More room for mistakes in your application

The main benefit of direct life insurance is ease of access and convenience, whereas advised life insurance gives you a more tailored product, with little extra cost. This is the trade-off that you’ll have to make when deciding what type of insurance policy to use.

Although Canstar doesn’t compare advised life insurance, we do compare direct life insurance. If you’re considering a direct life insurance policy, the comparison table below displays some of the policies currently available on Canstar’s database for a 30-39 year old non-smoking male working in a professional occupation. Please note the table is sorted by Star Rating (highest to lowest) followed by provider name (alphabetical) and features links direct to the provider’s website. Use Canstar’s life insurance comparison selector to view a wider range of policies.

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