Is bank life insurance all it makes out to be?
The core role of banks is pretty simple: to make money by lending money to individuals and businesses. In conjunction with this, banks have, over the last 20 years or so become increasingly involved in selling personal insurance products to their clients, as an “easy” way of diversifying and increasing their income stream. When one applies for a mortgage loan, banks will encourage clients to take up bank life insurance as well. Is this the best life insurance for you?
Sound bank insurance policies are out there, but …..
Some banks have offered sound policies through the mainstream insurance companies which they owned: for example, ASB Bank through Sovereign, ANZ Bank through OnePath. However, a number of other NZ trading banks have provided their own policies which are underwritten by those banks themselves. These policies, in comparison, are poor and not what we would see as the best life insurance option.
It’s interesting that in the last few years most banks are now exiting the business of owning life insurance companies and deciding to stick to their knitting: banking. So they should!
Specialist insurance providers specialise for a reason
There are very sound reasons to avoid life insurance policies offered by banks that are not underwritten by mainstream insurance providers. In a nutshell, such policies are very skeletal versions of the higher-quality products offered by specialist insurance providers. They do not stand up to scrutiny on quality grounds.
The best life insurance stands out a claim time
A further significant downside of buying life insurance through banks arises at claim time. How comfortable would you be in lodging a personal claim application with a bank teller whom you’ve never met before? Would they understand your cover, empathise with your situation and serve your best interests?
Working with your dedicated insurance adviser means that your trusted adviser will not only find the best life insurance for your situation, they will take over all the hassle of preparing and pursuing your claim, allowing you to concentrate on your rehabilitation and spending quality time with your family.
That’s what I do.