AustralianSuper Industry Fund insurance vs Financial Adviser insurance

You may have read in the media today that AustralianSuper has reduced it's insurance premiums by 14% on life insurance, 6% on Total and Permanent Disability (TPD) and 20% on Income Protection.  Whilst this appears to be a significant reduction, is it actually well priced?

Now, before we 'compare the pair' as they advertise, let me be clear that our advisers are authorised to advise on AustralianSuper (and other industry funds), we have recommended clients use their insurance, we have clients with them currently, so this is a genuine like-for-like and impartial comparison.

Lets use Mr Smith as our member.  He was born on 01/01/1980, he's 37 years old and a professional employee.  He wants $1M life and TPD insurance, and $10,000 per month income protection to cover his salary if he was unable to work.

Using AustralianSuper's calculator (publicly available on their web site), this would cost him $59.98 per week.

Lets now use his same information for an insurer available through a financial adviser, advisers can place the same cover for only $37.33.

That's a saving of $22.65 per week, or $1,177.80 per year!

AustralianSuper advertises that they:

  • don't pay commissions to advisers, and
  • don't receive commissions from insurers
This implies that they are guaranteed to be cheaper because of it, but nor are they a charity, they exist to make a profit like any other business.  As this example illustrates, it only tells part of the story.

You also often hear that they don't require medicals and underwriting when applying.  They do however ask for medicals and underwriting if you want to receive insurance premium pricing as a 'low risk' or 'professional' occupation to save money.  They can, and usually do, also ask for medical records at claim time because you are still required by law to disclose any pre-existing accidents or illnesses, which is why they have a lower successful claims rate than via insurances  accessed via a financial adviser.

So let me ask you this, why wouldn't you seek professional advice that saves you $1,177.80 per year, and also provides:
  • personal insurance recommendations to ensure you're adequately protected
  • a guaranteed policy (not merely an indication of cover) by being underwritten up front
  • an adviser to contact when ever you need to
  • a support team to manage and administer your insurance
  • an adviser and support team to manage your claims process, and
  • a much higher change of your claim being successful
Insurance is actually a very complex field, seek professional advice, especially when it is cheaper, better and quicker than doing it yourself!

Watch - The Value of a Risk Adviser:



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