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Life Insurance Premium Comparison

Is Life Insurance cheaper “direct” or through a broker?

Updated 2 December 2020

Are your life insurance premiums more than double what you need to pay?Life Insurance Compare Us To Others

A common misconception is that you will get cheaper life insurance if you buy “direct”, rather than through a life insurance broker like Insurance Watch.

To debunk this myth, we review life insurance premiums from some of the direct insurance brands heavily advertised on television and compare these to the cheapest premiums available from the Insurance Watch range of insurance companies.

Who has the Lowest Life Insurance Premiums?

The sample quotes in the premium comparison below are for a male and a female living in Victoria Australia, aged 40 years old, non-smokers and seeking $500,000 life insurance cover.

The direct insurance brands, rather than being lower in cost, actually have life insurance premiums on average more than double those from Insurance Watch!

Why is this the case? Higher marketing budgets, lower retention rates and less information about applicants are just some of the reasons why direct brands cost more.

To check if a lower premium is available for your policy go to Compare Quotes.

Life Insurance Premium Comparison – who is cheapest?

Male 40 years old and a non-smoker: Monthly Premium Percentage Higher
Insurance Watch – NEOS Life $ 27.40
Allianz Life insurance $ 40.33 + 47%
Qantas Life insurance $ 47.55 + 73%
AHM Life insurance $ 56.34 + 105%
Medibank Life insurance $ 59.30 + 116%
NIB Life Insurance $ 63.00 + 130%
Insuranceline Life insurance $ 63.24 + 130%
NRMA Life $ 63.53 + 131%
HCF Life insurance $ 65.00 + 137%
AAMI Life insurance $ 66.50 + 142%
Suncorp Life insurance $ 66.50 + 142%
Virgin Life insurance $ 68.50 + 150%
Kogan Life insurance $ 70.75 + 158%
Real Life Insurance $ 70.81 + 158%
Guardian Life insurance $ 74.88 + 173%
Woolworths Life insurance $ 76.50 + 179%
  Average: + 131%
Female 40 years old and a non-smoker: Monthly Premium Percentage Higher
Insurance Watch Lowest – Integrity Life $ 22.33  
Allianz Life insurance $ 31.31 + 40%
Qantas Life insurance $ 36.26 + 62%
AHM Life insurance $ 43.75 + 95%
Medibank Life insurance $ 46.05 + 106%
NIB Life insurance $ 49.50 + 121%
HCF Life insurance $ 49.80 + 123%
Insuranceline Life insurance $ 50.22 + 124%
AAMI Life insurance $ 53.01 + 137%
Suncorp Life insurance $ 53.01 + 137%
Virgin Life insurance $ 54.00 + 141%
NRMA Life $ 55.44 + 148%
Kogan Life insurance $ 56.78 + 154%
Real Life Insurance $ 57.08 + 155%
Guardian Life insurance $ 60.36 + 170%
Woolworths Life insurance $ 61.39 + 174%
  Average: + 126%

The above life insurance premium comparisons are accurate as at 2nd December 2020 and do not include membership or other discounts. The Insurance Watch quote used is the cheapest of the 10 insurers we compare and the premium shown is also BEFORE the Insurance Watch 10% cashback offer.

Who are the insurers behind the “direct” insurance brands?

As noted by CHOICE Australia a number of the direct brands listed above are actually owned or distributed by related parties. Therefore websites which only compare quotes from direct brands may actually be comparing a limited number of underlying insurance companies.

For example, in the table above, 7 brands (Qantas, NIB, Insuranceline, NRMA, AAMI, Suncorp and Virgin) are distributed by TAL Direct, with TAL Life Limited the actual insurer. In addition, 6 brands (AHM, Medibank, Kogan, Real, Guardian and Woolworths) are distributed by Greenstone with either Swiss Re or Hannover Life Re as the underlying insurance company. It is the insurance company, not the distributor, who is responsible for paying claims.

What to look for when comparing insurance premiums

There is also a need to be careful of “Awards” and “Reviews” which only cover direct life insurance brands. If they are just comparing the pool of higher priced direct policies they may have a distorted measure of “value”. As can be seen from the above premium snapshot, the range of retail policies available through Insurance Watch can be cheaper, as well as more benefit rich.

When comparing premiums, it is also important to ensure that the quotes you obtain are for the same payment frequency. “Direct” premiums are often quoted on a fortnightly basis, rather than monthly, making them appear initially affordable. They should always be compared on a like for like basis.

Benefits and Exclusions are also important

Of course, when shopping around you should not just look for the cheapest life insurance option but also consider the benefits offered by each policy. See our tips and traps when buying Life Insurance.

Buying “direct” can mean that your policy will have more exclusions or restrictions due to the limited underwriting done at application time. It also means that at claim time you will not have the support and assistance of a broker like Insurance Watch to act on your behalf in dealing with the insurer. Claims statistics show that direct life insurance policies generally have a lower claims acceptance rate than policies sold by brokers.

Pressure selling tactics

The 2018 Royal Commission condemned the high pressure sales tactics used by the call centres of direct insurers. Often this will involve keeping the customer on the phone until they agree to purchase, without the opportunity to make price comparisons. When consumers do make these comparisons they often find that the policies are poor value as evidenced by the 1 in 5 who drop their insurance policies in the cooling off period.

Insurance Watch provides online comparisons of premiums and benefits for all the insurers we cover. No personal information is required to view these, so you don’t need to worry about being hassled by call centre sales representatives.

Click below to start comparing:

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