Analysis: advised clients fare better in life insurance claims

Recently published data highlights that advised life insurance clients typically achieve an improved result in the life insurance claims process compared to claimants who do not benefit from expert advice from a financial advisor.

Specialist Wealth financial advisor, Katharine Fasal said the analysis confirmed what many financial advisors have known for years and what many of their clients had experienced for themselves. 

The Australian Prudential Regulation Authority’s (APRA) Life Insurance Claims and Disputes Statistics for 2023 confirm that claims admittance rates for individual advised death, Total and Permanent Disability (TPD), trauma, and Disability Income Insurance (DII) cover remain higher than those for individual non-advised claims.

According to APRA’s data for 2023, the claims admittance rate by cover type and distribution channel reveals:

• Death Cover: 97% of individual-advised claims were admitted, compared to 91% of individual non-advised claims.
• TPD Cover: 83% of individual-advised claims were admitted, compared to 78% of individual non-advised claims.
• Trauma Cover: 87% of individual-advised claims were admitted, compared to 83% of individual non-advised claims.
• DII Insurance: 95% of individual-advised claims were admitted, compared to 88% of individual non-advised claims.

In the Industry Highlights section of the report, APRA states that from June 2018 to December 2023, “admittance rates across all distribution channels have remained relatively stable over time”. The report also notes that admittance rates vary by cover type but have remained relatively stable.

“What is clear is that when clients have the benefit of advance and guidance, they achieve a better result when it comes to these particular insurance categories,” Katharine Fasal explained. “That means they’ll likely get a better deal when selecting a policy, and they’ll get a better deal if they ever have to make a claim”.

“Medical professionals who don’t have the time to research policy options and seek the advice of a financial advisor likely don’t have the time to jump through the hoops associated with an insurance claim,” Katharine Fasal suggested.

“Getting good financial advice is advantageous in both contexts,” she concluded.