Life Insurance: Broker vs Going Direct

A broker, more precisely a life insurance adviser, compares products across multiple insurers, which is what is meant by shopping "the market." They look at your circumstances and give personal advice, recommending a policy and structure suited to you. Buying direct from a single insurer means you see one company's products, and what you receive is often general advice that does not consider your situation. Default cover through a super fund or super portal is convenient and requires little effort to set up, but it is a standard product rather than one tailored to you.

Not always. The lowest headline price can come with narrower definitions, more exclusions, limited benefit periods or a lower level of cover, which only matters at claim time. A cheaper premium for thinner cover is not the same as better value. The quality of a policy sits in the policy wording, the definitions and the benefits, not just the monthly cost, so it is worth comparing what each quote actually pays out and under what conditions.

"The market" refers to the range of insurers and products an adviser can compare on your behalf, rather than a single company's shelf. Comparing from the market lets an adviser weigh different definitions, premium structures, exclusions and features against your needs. A direct insurer, by contrast, can only offer its own product. Comparing across the market is one of the main reasons people use a broker.

Default cover inside super is convenient and helps many people start with some protection, but it is often basic. It can carry stricter definitions, such as own-occupation TPD generally not being available inside super, and benefit periods on income protection held in super are often limited. It is a standard product applied broadly, not cover tailored to you. Paying premiums from super is also not free, because it draws down your retirement balance. A retail policy can be matched more closely to your needs, which is the kind of comparison worth talking through with an adviser.

Personal advice considers your individual circumstances, such as your situation, needs and what cover suits you, and leads to a recommendation made for you. General advice does not take your circumstances into account, it explains how a product works in general terms without a tailored recommendation. Direct insurers often provide general advice only. Anyone giving personal advice on life insurance in Australia must be listed on the Financial Advisers Register, published on ASIC's Moneysmart, which you can search by name, adviser number or ABN.