The problem with Insurance from the bank

We all love a bargain – after all, nothing feels quite as good as the immediate emotional reward of purchasing something ‘on the cheap’. That’s why securing Insurance from a bank might seem like a convenient, hassle-free option: low price, short forms to fill, no questions asked. But when you’re signing up for a long-term Insurance plan, are bank-sold covers good value-for-money?

Depending on your circumstances and needs, more often than not, the answer is no. Here are the key reasons why taking out Insurance through a bank, rather than through an Insurance Adviser, may not be a good idea.

The price you pay for ‘saving time’

Just like online Insurance, most bank-sold Insurance policies are marketed as quick, easy-to-set-up solutions. Consumers are told that they can get “cover immediately in branch or over the phone”, in just “10-15 minutes”, and most importantly, with “no need to provide detailed information” about their health or occupation. In Insurance jargon, it means that you are applying for a ‘non-underwritten’ Insurance cover.

The underwriting process is designed to give you certainty over when you’re covered for an insurable event. And this is essentially what differentiates a bank-sold policy from a policy secured with the help of an Insurance Adviser.

By guiding you through the paperwork and asking detailed questions about your individual circumstances (e.g. health, lifestyle, occupation, etc.), an adviser can help you tailor your policy to your unique needs. For example, if you have pre-existing medical conditions, those may not always be excluded: after a thorough assessment of your situation, the Insurance provider may decide to cover them and add a ‘stand-down’ period or increase your premiums.

On the contrary, non-underwritten products usually have a blanket exclusion for pre-existing conditions, as well as certain so-called ‘hazardous activities’ such as mountaineering, rock climbing or motorsports.

Are they really cheaper?

In 2016, an independent insurance product research firm compared some of the most popular Life Insurance covers available. What Quality Product Research found is that ‘quick and easy’ non-underwritten products may end up costing almost 70% more than their fully underwritten counterparts.

Of course, this is not a secret: Insurance providers clearly specify what’s excluded in the Policy Wording. But without a specialist in your corner, it’s also easy to fall for the low price tag and overlook the long-term consequences. As a result, you might end up taking out sub-standard cover that, come claim time, doesn’t deliver on what was expected.

That’s why we’re here

As we said, understanding the fine print is important, especially when you’re exploring your options and comparing products. We know the ins and outs of Insurance policies and can talk you through how these details impact you.

In a nutshell, choosing the right Insurance is an important decision: it’s about peace of mind and certainty of claim. Therefore, it’s a good idea not to rush it. Take the time to think about your needs and ask for assistance: our job is to talk you through your circumstances and help you find the right fit for them.

An Adviser Disclosure Statement is available free and upon request.