Life cover simplified – you’re either alive or dead

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Advocates for advisers' having a role to play in all types of insurance cover are talking "absolute nonsense" according to Pinnacle Life managing partner and founder Noel Vaughn.

Thursday, October 13th 2011, 12:45PM 13 Comments

"We're of the view that term life insurance is a commodity product, or approaching commodity status, rather than a personally tailored status. I think the banks themselves, with the hold that they've got in the market, are a good illustration of that," he said.

Referring to the argument that an adviser's expertise should be sought when obtaining insurance, Vaughn said "I think there's segments of the market where that's an absolutely valid statement, and I think there are other segments of the market where it's absolute nonsense."

Vaughn also said the arguments in favour of having an adviser on board at claim time are of varying validity depending on the insurance product in question.

"I think if you're dealing with things like income protection I think that's very true, I think if you're dealing with disability insurance and some of the trauma stuff I think there's an element of truth in that, I think when you're dealing with life insurance, well you're either alive or dead, there's no debate about the issue fundamentally."

The role Vaughn sees Pinnacle occupying is to target the growing, computer literate, younger generation by offering simple insurance products.

"We're getting the computer savvy people who trust themselves to do things online, they buy other products online so why not their life insurance?" he said.

One factor he said was essential to the success of his no-advice, online model was speed.

"If you're in the online space it's about immediate satisfaction if you can deliver it, so you've got to be able to offer the client something rather than go into the underwriting loop which is the big problem with the industry."

Vaughn said this was one area, especially with more complicated policies, where the adviser certainly had a role.

"The brokers actually are better at that because they keep that communication with the customer going over that long time period, so when you're in our end, the commodity end, speed is of the essence."

He was also dismissive of suggestions people could find themselves with inadequate cover using the no-advice model.

"If you offer people the commodity option, they buy what they think they need rather than being persuaded they need three times the amount and all the Rolls-Royce benefits."

Vaughn is clear that the Pinnacle model works largely because he shies away from these 'Rolls-Royce' options.

"We've gone for the base products because commodities deal in base products, they don't deal in the add ons. We have a base trauma, we don't have the full range of trauma products, we do lump sum disability but we don't do disability income, the stuff that gets complicated and there's subjective judgement involved is the area where you need brokers and you need insurance companies that have got the capacity to deliver in that area."

"The brokers have their place in the market, we will never supplant that, we don't intend to, but equally I think there's a place for us," he said.

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