How a Life Insurance Broker Can Save You Money

Finding the right insurance policy to protect you and your family can be stressful because you don’t want to choose the wrong policy, that doesn’t cover you adequately. One of the best ways to make your choice as easy and painless as possible is by working with a life insurance broker.

Published April 17, 2024

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In this guide

What is an insurance broker?

An insurance broker is a specialist in insurance that’s able to provide you expert knowledge, cutting through the industry jargon, so you can easily understand your options. They can often access a number of insurance companies to help you find cover at an affordable price, helping you gain a better understanding of the cover, benefits and features available from differing companies.

You’ve already decided to buy insurance; now the question becomes how much time you are willing to spend and how do you make an informed decision while finding value for money. A top insurance broker should guide you toward finding the appropriate information quickly, simplifying the decision-making process.

Life Insurance Direct is a leading online life insurance broker, helping customers all over Australia compare policies and premiums with the aim of enabling you to decide which policy meets yours requirements. We help families understand these options and how to find affordable cover and provide an easy over the phone application process.

We want to empower you to make an informed decision regarding choosing cover that will protect your lifestyle and loved ones. This article will help you decide between using a broker or buying directly, as well as explaining the pros and cons of each.

What does an insurance broker do?

An insurance broker can give you access to a number of insurers. They typically spend a lot of time in training, understanding the terms and conditions and the ways in which to optimise your policy structure to meet your unique requirements and budget. They spend a lot of time searching for the best match, while also assisting with claims and general policy administration.

Benefits of a personal life insurance broker

Using a life insurance broker vs. buying directly

Life insurance companies prefer to sell you insurance directly and not pay a brokerage fee, which might indicate that buying insurance via a representative is more expensive, but this is a myth.

Contrary to popular belief, buying directly from an insurer is generally 50 – 100% more expensive than purchasing from a broker. Because insurers are in constant competition to win this large market segment, they need to provide competitive premiums along with strong policy features or risk losing out.

Brokers have access to extensive research which makes comparing policies side by side very easy, so insurers have to ensure their policy stacks up, or they won’t get any customers from this market segment! Thus, brokers generally receive competitive rates with strong policy features for their clients.

Exclusive Research compared 32 Brands premiums side by side (Direct vs. Advised vs. Super Funds) which reveals the channel you choose to purchase your policy can have a major impact on the premium you pay. You will see policies offered by brokers/specialists are often cheaper compared to Direct policies.

Pros and cons of purchasing directly from an insurer

Simple application process. Over the phone, online or directly through your bank.Poor claims payment record, with a 71% higher chance of your claim being declined than when purchased through a broker
Minimum or no medical information required at application time.If you have a pre-existing condition you are more likely to be declined, referred or loaded.
Limited or no underwriting during application.Generally, policies are only fully underwritten at claim time, making premiums more expensive and exclusions more likely.
The agent will make every effort to sell you the policies they have.You are limited to purchasing only their products, which might not be getting value for money or the cover you need.
Has exceptionally thorough knowledge and understanding of their company’s products and services.The absence of a specialist means you have to review and compare products yourself and you’ll not have help with the application process.
No need to talk to a broker, which may save you time at application stage.You might not get what you wanted and the cover your family expected or required.

Pros and cons of using a broker

Better access to a greater number of life insurance companies and a diversity of policy options.It can be overwhelming hearing all the policy options, benefits and structuring options available.
Easier to find good value with less effort, as they are motivated to keep you happy and save you money with good coverage.You might feel the broker is pressuring you into a decision, if this is the case find another broker.
Brokers have extensive experience and access to detailed research on premiums, features and policy definitions that makes comparing extremely easy for you.Some only work with 1-2 companies you may want to see if this works for you, but most will work with 5-10.
They work for you, not for the company and will thus generally put your interest first and find a policy that meets your requirements.They can misunderstand your requirements and not deliver what you expected but this can often be addressed before you proceed with a policy.
Generally no additional costs to you. Brokers generally get a fee from the companies they work with.Brokers can charge a fee, therefore check upfront if they will be reviewing their FSG.
Most representatives will help you in claiming from your insurer and fight for you to get what is owed.
Having an experienced broker in your corner is not to be underestimated! They are extremely experienced and can help get your claim processed appropriately.

How to choose a life insurance broker

Insurance might only be one part of planning for your financial future, but it is a very important part and should receive the appropriate level of consideration and thought. Remember, your insurance needs will change, so you should choose a life insurance specialist that will help you assess your insurance needs every few years.  There are 4 important steps to consider before starting your search.

The difference between Personal and General advice

1. Personal advice

Personal advice is where you will be asked to complete a detailed fact find, which includes your personal needs and circumstances, as well as a detailed account of your assets, savings, liabilities and income. You will usually be charged additional fees for this service. However, if you need your cover personalised and would like a personal recommendation, then you might want to see a financial adviser providing personal advice.

2. General Advice

This type of broker does not take your personal finances and objectives into consideration, however, in most cases, they will be able to meet your requirements by providing you factual and general information which then allows you to make a decision on how you want to proceed.

How much do brokers charge?

Generally you don’t pay anything more than what the policy is worth as brokers are paid a brokerage from the insurers they use. However, if they do charge anything they will inform you of this upfront.

Why use Life Insurance Direct?

Life Insurance Direct is one of Australia’s leading Life Insurance Brokers and has been featured in many prestigious media outlets, like Financial Review, Smart Investor, Wealth Professional and Professional Planner.

Benefits of using Life Insurance Direct as your broker

If you have any questions about the different types of life insurance policies available and which one might suit you best, feel free to contact us anytime or fill in the quote form above and one of our specialists will contact you as soon as possible.

Get an instant Life Insurance quote

Or call us on:

1300 135 205

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