So, what is the value of an insurance broker?
Here are a few things of which consumers may be unaware when it comes to the benefits of speaking with an insurance broker:
Automatic acceptance is an attractive concept, but most clients would be shocked to learn that in many cases this is coupled with an underwriting process that is done at the time of claim. This means a greater chance of having a claim knocked back, with the client discovering – too late – that all the money they have been paying on for years has been a complete waste. The benefits of underwriting at the time of application rather than the time of claim cannot be downplayed. Most brokers will facilitate this process when lodging applications.
Great brokers set clients’ expectations about what is likely to be an arduous process. They, or their staff, will walk each client through that process of completing forms, liaising with underwriters, etc. In many instances, were it not for the broker, the client would likely either not start the process, or give up part way through.
Brokers will know what types of cover are most important to the individual, given their life stage and circumstances (i.e. life, TPD, trauma, income protection). They will know what levels of cover to put in place, and what coverage to reduce if the client’s budget does not allow for the optimum levels. Not only will brokers choose the most cost-effective options, but they will also select the right inclusions for the situation. Or, in the words of one wise risk adviser, brokers will help “clients choose the best value option after analysing both benefits and costs.”
Brokers are knowledgeable enough to advise on how to structure the ownership of policies to minimize tax payable – both on the premiums clients pay and on any payout that they may receive. They would know, for example, whether to select level or stepped premiums, agreed value or indemnity, or between ‘Any’ or ‘Own’ occupation. They can help clients understand the pros and cons of holding insurance via superannuation, considering such things as the harsh conditions of release for total permanent disabled (TPD) insurance.
Access to other professionals
Many small business owners talk about the challenges in finding good brokers. Many consumers simply don’t know to whom they should speak. In contrast, most brokers have a network of other professional people whose skillsets they understand and know which are reputable.
Often the client is in the worst position to understand what he or she should do. Aside from the challenge of being emotionally involved, behavioural economics has proved that financial behaviour is rarely logical or in the individuals’ own best interests. Having access to a professional who can give objective insight, explore the full breadth of issues and risks and ensure action is taken (which for many is the sole barrier to inevitable wealth and financial security) can’t be over-emphasised. Olympic athletes don’t get coaches because they don’t know what to do. They do so to ensure they achieve what they set out to.
Many participants shared how they are increasingly approaching the risk discussion from a wider estate planning perspective. If the proposition is true risk management, then choosing to highlight the impact of having an adult child becoming incapacitated or taking responsibility for ensuring money goes to the right people at the right time (for example, with the challenges of blended families) has uncovered new value for the clients of many risk advisers.
Google may have democratized information, but choice can be a bad thing. Being able to turn to a trusted source of information – someone who can align what they know about insurance with what they know about a client – can ensure costly mistakes are avoided.
Many businesses choose to add greatest value by understanding very deeply the insurance needs of a specific target market. Whether those target markets include surgeons, mining executives, young FIFOs, retiring CFOs, flight professionals or even female pre-divorcees, being able to appreciate the circumstances, speak the ‘lingo ‘and ask the right questions has lifted many business to a new levels of growth.
Someone to whom to speak
Perhaps one of the most valuable things about having a broker is the ability to call on them when something goes wrong. The broker will know if the client should make a claim, ensure they do (when perhaps there is apathy or uncertainty of entitlements) and, in most cases, will handle the paperwork and liaison with the insurer, relieving a lot of stress from the client at what is typically a very emotional and difficult time.