Is conventional life insurance better than direct?

life insurance

You’ve decided you need life insurance… You’ve just bought a new home and need R1 million (or R2 million) in life insurance right now. Question is…Where do you start looking?
Maybe you’ve typed “life insurance quotes” into Google and come across direct life insurance? Or maybe you’ve had a few brokers pop around at home and prepare “traditional” life insurance quotes?

So how do you decide which one is best?

One of the first things you need to do is look at convenience.
Prefer calling a direct life insurer and getting the cover straightaway without any medicals? Or would you rather know that the life insurance company has all your medical information and absolutely no excuse come claim time?

Here’s what’s great about direct life insurance…

  • You’ll know how much you’re going to pay by the end of the call.
  • You’ll also enjoy life cover from either the date they accept you as a client or from the date that they receive payment.

Here’s what’s not so great…

  • They’re all about honest answers to their underwriting questions. A little white lie here or there could void your life insurance claim…and who wants to pay thousands of Rands for life cover which will never pay anyway?
  • You also need to be aware that a negative HIV test is a requirement if you decide on the direct route. Ignoring, or worse – forgetting about – the HIV test means your life insurance now becomes accidental death cover only. Dying from a heart attack, for instance, would mean no claim allowed.

Here’s what’s great about conventional life insurance companies…

  • As long as you disclosed all relevant information, once they accept you, you know they can’t turn down claims for medical reasons. A heart attack caused by high cholesterol won’t be turned down if at the time of taking out the life insurance your cholesterol was perfect (unless of course, you failed to disclose a problem prior to the insurance medicals)!

And the downside of “old school” life insurance companies?

  •  The cost which the broker quotes you could vastly differ from the premium they finally offer. The broker might quote R150 per month for the insurance, but the insurance company could reject that and offer the cover at R300 per month.

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