By Craig Uys
Believe it or not, life insurance has been around since Roman times, and has been continually changing and better developing itself to adapt with the times. Ancient Romans had ‘burial clubs’ that covered the cost of members’ funeral expenses and assisted survivors financially, for a short period.
Move forward a few thousand years, and insurance as we know it actually originated in 17th Century England, where traders, merchants and ship owners would insure their crews and ships. They used to meet with underwriters to discuss the finer details of the insurance at Lloyd’s Coffee House (London).
Marketing of insurance really took off with the insurance salesman, walking the streets from home to home, and making cold calls as well, normally during dinner. Promoting the products as a form of savings account was a way of selling basic life insurance policies to the whole family.
These developments have led insurance to where it is today. Insurance is now easier and quicker to obtain, with enhanced new products offered in a competitively priced market. Technology has provided the platform for these developments. These days, one can simply access a few websites and obtain quotes for insurance cover. Providers are now promoting the fact that you can ring a number, and with no financial information or medical history, receive an accurate quote.
While it is made to sound so simple, we are now dealing with the repercussions of these advances to a self-service system. An increasing number of people are greatly underinsured, and finding out the hard way the reasons why you are not required to provide much evidence to gain cover with these products.
Since these providers are not required to obtain a full picture of the client’s current position in their life, they are not required to give the client recommendations on the appropriate level of insurance cover. This potentially leaves clients underinsured. A study conducted for the Investment and Financial Services Association (IFSA) found that, should they die, 60 percent of Australian families with dependent children have not got enough life insurance cover to look after their family for one year. The quality of these products can also be grossly overstated.
On the other hand, insurance advisers are required to provide clients with full recommendations that will meet their needs and match these needs with the best rated products in the market that will increase their chances of a successful claim if an insured event were to occur. Advisers are also able to recommend a number of strategies to demonstrate how policies can be structured to suit individual needs.
So even with the great advances in the insurance industry, there are still some traps that clients need to be aware of.
It is therefore paramount to seek professional advice before entering into any life insurance contract.
