Adviser products shine

Insurers say competition and pressure from advisers is forcing them to come up with better policies than those offered by banks.

Wednesday, July 20th 2016, 6:00AM

by Susan Edmunds

Naomi Ballantyne

Life insurance has been in the news this week after it was revealed that a number of the major banks were reviewing their policy wordings, particularly related to the definition of a heart attack.

Commonwealth Bank of Australia, parent of ASB, earlier this year came under fire when it turned down a claim from a man who died of a heart attack and was resuscitated.

It would not pay out because the level of a hormone called Troponin in the man's body had not reached a level required in the policy wording. The resulting outcry led to an apology and a review of the policy.

But products sold in New Zealand by ASB, Westpac and ANZ still have that same wording and would decline a patient in the same situation. Those policies are under review.

Research from Russell Hutchinson, at Quality Product Research, showed adviser products would have paid out in the case. AIA, AMP’s LIfetrack, AMP’s RPP Plus, Asteron Life, Fidelity Life and Partners Life were all likely to have made a full payment in the case, he said, along with BNZ.

Sovereign’s Comprehensive and Progressive Care would likely have made a partial payment, as would OnePath.

Naomi Ballantyne, of Partners Life, said she was not surprised.

“Advisers put pressure on life insurance companies to offer terms and conditions they believe they can sell and that will cover their arses in the event of a claim. They are putting themselves out there for their clients, they don’t want to have to say at claim time ‘that product I sold you didn’t pay’.”

She said insurers who wanted to compete for adviser business had to make sure their products stacked up. “When you’re only selling your own product there’s no competition for distribution.”

Natalie Cameron, of AIA, agreed. “The development of product in the IFA market is driven by constant competition to meet consumer needs. Policies do not cover every possible contingency or condition but IFAs demand policies that meet their clients' expectations.

“If a consumer wants advice tailored to protect them and their family against their particular risks, their best option is to find a good adviser to help them identify the right type and level of cover."

Tags: AIA Life insurance Partners Life