The Power of Expertise: Why Partnering With a Financial Adviser Is Key in Insurance Planning

Many individuals have misconceptions about buying insurance directly from insurance companies. There is a common belief that cutting out the middleman and purchasing insurance directly will save money and simplify the process. However, this is not the case.

This article will debunk the most common misconceptions about purchasing insurance directly and highlight the benefits of working with a financial adviser.

Myth #1: Purchasing Insurance Direct is Always Cheaper

One of the most prevalent misconceptions about purchasing insurance directly is the belief that it will always be cheaper.

We hold no evidence to suggest buying online is cheaper (the “DIY approach”). We have seen the odd “cash back” deal advertised as click bait for quick sales. When purchasing insurance directly, individuals may miss out on personalised advice and tailored coverage options that a financial adviser can provide. How would we possibly know what we are buying online, if we are not an expert in analysing insurance, product and provider comparison, and general industry knowledge?

Insurance is a minefield, if that notice hasn’t been received to date!

Additionally, insurance companies offer different pricing tiers based on the level of risk associated with an individual (like with occupation classes, smoking status or possibly loadings added for aspects like BMI and other contributing health risks perceived at underwriting time). Without the guidance of a financial adviser, individuals may not be aware of the various factors that can affect their insurance premiums.

This lack of knowledge could result in individuals paying more for their insurance coverage than necessary, accepting exclusions (or longer timeframes on reviewable exclusions to unnecessary permanency of exclusions) when they could be negotiated (and/or timeframes negotiated per exclusion review period), and generally and frankly not knowing the meaning of what they are reading and accepting.

Myth #2: Purchasing Insurance Direct is Easier

Another common misconception is that purchasing insurance directly is simpler than working with a financial adviser. While it is true that online platforms and direct insurance companies offer convenience and easy access, there are potential drawbacks. Without the guidance of a financial adviser, individuals may struggle to understand complex insurance policies, coverage options, and exclusions.

A financial adviser can help individuals navigate the intricacies of insurance policies, ensuring that they clearly understand what is covered and what is not. Additionally, a financial adviser can assist with the claim process, providing support and guidance in times of need. Take exclusions as an example, will you diarise to review your exclusion(s) with the insurance company, know how to approach that, and spend the time, and possible debate process required; we will, and do!

Myth #3: Financial Advisers Only Benefit the Wealthy

Another misconception is that financial advisers are only beneficial for the wealthy. This belief stems from the assumption that financial advisers only handle large investment portfolios and complex financial matters. However, financial advisers can provide valuable guidance and support to individuals from all walks of life.

Financial advisers can assist individuals in creating a comprehensive financial plan that includes insurance coverage tailored to their specific needs and goals. They can help individuals understand the importance of insurance in protecting their assets and provide guidance on the appropriate coverage amounts; we do look at over-insurance as much as we do under insurance, when consulting with clients. Financial advisers also have access to a wide range of insurance products and can help individuals find the best options that fit their budget.

Myth #4: Financial Advisers are Expensive

Some individuals believe that working with a financial adviser is expensive and not worth the cost. New Zealand Financial Advisers typically receive a commission from the insurance company once a policy has been issued and do not receive direct payment for their advice from their clients. Financial advisers have the knowledge and expertise to help individuals make informed decisions about their insurance coverage and overall financial well-being. Although there may be times we charge for advice, this is not typical as we are remunerated by providers via commission.

Financial advisers can comprehensively analyse an individual’s financial situation and goals, helping them prioritise their insurance needs. Financial advisers can save individuals money in the long run by identifying potential gaps in coverage or unnecessary overlap. Additionally, financial advisers can review insurance policies periodically to ensure they remain aligned with an individual’s changing needs and circumstances.

Myth #5: Financial Advisers are biased

Another misconception is that financial advisers are biased and may prioritise their own interests over their clients. While choosing a reputable and trustworthy financial adviser is essential, the majority of financial advisers adhere to strict ethical standards and act in their client’s best interests. We recommend checking out references and online reviews to get a sense of whether you would like to approach an adviser. As of October 2023 our Google reviews total nearly 100 and we have a 5-star rating.

Financial advisers have a fiduciary duty to their clients, which means they must act in their client’s best interests and disclose any potential conflicts of interest. They are required to provide transparent and objective advice, ensuring that individuals receive the most suitable insurance coverage for their needs.

The Benefits of Working with a Financial Adviser

Now that we have debunked the common misconceptions about purchasing insurance directly, let’s explore the benefits of working with a financial adviser.

Tailored Insurance Solutions

One of the primary advantages of working with a financial adviser is accessing tailored insurance solutions. Financial advisers take the time to understand an individual’s unique circumstances, financial goals, and risk tolerance. Based on this information, they can recommend insurance coverage that aligns with an individual’s needs and offers the most value.

Financial advisers can access a wide range of insurance providers and policies, allowing them to compare options and find the best coverage at competitive rates. They can customise insurance packages that protect individuals against specific risks and provide peace of mind.

Expert Advice and Guidance

Financial advisers are experts in their field and have a deep understanding of insurance products and the ever-changing insurance market. They stay up to date with the latest industry trends, policy changes, and regulations, ensuring that individuals receive accurate and timely advice.

Individuals can tap into their adviser’s knowledge and expertise by working with a financial adviser. Financial advisers can explain complex insurance jargon, educate individuals about different coverage options, and provide recommendations based on their experience and expertise.

Comprehensive Financial Advice

Insurance is just one piece of the puzzle when it comes to financial advice. Financial advisers take a holistic approach to individuals’ financial well-being and consider various aspects, including insurance, investments, retirement planning, and estate planning.

Individuals can benefit from comprehensive financial planning that considers their short-term and long-term goals by working with a financial adviser. Financial advisers can help individuals create a roadmap for achieving their financial objectives, ensuring that insurance coverage is integrated into their overall financial risk plan when it comes to insurance.

Personalised Risk Assessment

Determining the appropriate insurance coverage requires a thorough assessment of an individual’s risk profile. Financial advisers have the expertise to evaluate an individual’s risk exposure and recommend insurance coverage that adequately protects against potential risks.

When assessing an individual’s risk profile, financial advisers consider various factors, such as age, income, assets, liabilities, and future financial goals. This personalised risk assessment ensures that individuals have the right insurance coverage in place to protect their financial well-being.

Ongoing Support and Service

Working with a financial adviser is not a one-time interaction but rather a long-term relationship. Financial advisers provide ongoing support and service to their clients, ensuring that their insurance coverage remains relevant and current.

Financial advisers can review insurance policies periodically to determine if any adjustments or updates are necessary. They can also assist with policy renewals, claims processing, and addressing any insurance-related concerns or questions that may arise.

Purchasing insurance directly may seem convenient and cost-effective, which we have debunked with our above thoughts, and purchasing online in our view also comes with limitations and potential pitfalls. Working with a financial adviser offers numerous benefits, including tailored insurance solutions, expert advice, comprehensive financial planning, personalised risk assessment, and ongoing support. By partnering with a financial adviser, individuals can ensure that their insurance coverage aligns with their unique needs and provides the necessary protection for their financial well-being.

So, when it comes to insurance, don’t fall for the misconceptions – trust the expertise and guidance of a financial adviser.