What does a life insurance broker do?
A broker can guide you through getting life insurance, but it can take a little longer to kick start your policy.
![Image: Supplied Cheap Insurance](https://www.finder.com.au/finder-au/wp-uploads/2024/06/Cheap_Life_Insurance_Supplied_1800x1000.jpg)
A life insurance broker is a specialist who's qualified to give you expert advice and has access to numerous life insurance providers.
They can be helpful for people with complex life insurance needs, or for those who want help deciphering confusing terminology. Brokers can offer greater support during the application process and recommend products based on what you've told them.
Key differences | Broker | Direct |
---|---|---|
Research | The broker will do this for you. | You do this yourself. |
Application process | They'll send you forms to fill out and let you know what medical exams to arrange. | You'll apply online or over the phone. In some cases, you'll be asked to get a medical exam. |
Time to apply / application approval time | Longer, can take weeks. | Shorter, can be done fast if no medical needed. |
Average claims approval rate | 96.9% | 91.9% |
There are two important things to understand about how going through a broker can impact your ability to; 1 - get your life insurance application accepted and 2 - have your claim approved in future.
Going through a broker can make it harder to get your policy application accepted. This is because the application process is rigorous, due to underwriting. It's a good and a bad thing. If you're in good health — your application will likely be accepted. If you're in bad health, your application will likely be rejected.
When it comes time for you or your beneficiary to make a claim on your life insurance policy, those who have purchased their policy via a broker<,strong> have a higher claims approval rate.
Put simply, those who go through a broker tend to have their claims approved and paid out more often than those who don't go through a broker. This is because the initial application process via a broker is so thorough that it removes room for error that could give insurers grounds to deny a claim.
Less rigorous applications (like the ones from going direct) can see to a lower claims acceptance rate because the insurer knows less about you and therefore, it can give them more grounds to deny your claim.
Here are the latest figures from the Australian Prudential Regulation Authority (APRA) about this.
Industry average claims acceptance rate for those who purchased via a broker: 96.9%
Industry average claims acceptance rate for those who purchased directly from an insurer: 91.1%
These statistics are referencing the June 2024 report.
Not usually. Life insurance brokers make their money from insurance companies by earning a commission on policies sold via the people they refer. This means you shouldn't pay a cent.
However, as with anything that comes free - it can be wise to consider the implications of this.
While you may not pay to use a broker, the trade off could be that you only have access to policies from a select few insurers, rather than the whole market.
Yes, in fact, this is why many people opt to get life insurance cover via a broker. Their expertise and understanding of complex policy terms can be helpful for people who are trying to find life insurance with a pre-existing condition.
Read our comprehensive guide to finding the best life insurance policy for your situation.
If you suffer from a chronic condition, life insurance is important to consider.
Personal insurance provides security against the unfortunate events in life including serious illnesses and death.
Here are some of the health reward programs and discount schemes available from Australian life insurance brands.
What you need to know about Allianz Life Insurance.
Find the latest life insurance deals and discounts from Australian brands.
A guide to life insurance and mental illness.
By 2066, 1 in 5 Australians will be over the age of 65.
Find out what cover is on offer from Zurich Life Insurance and receive a secure quote for cover. Zurich offers a Life, Income, TPD, Trauma, and Child Cover with additional options to tailor cover further.
Compare Life Insurance and Income Protection policies from Real Insurance and get cover in place with no medical or blood tests.