Tag Archives: 1lifedirect

Now that would be an “out-bonus”!

You always get something out – at least, that’s what they promise and that’s how they sell it to you. I’m talking about the “out-bonuses” that direct insurers promise to pay you 5 years from now.

Based on my quote with OutsuranceLife, they “promised” to pay me 10% of the premiums paid over 5 years as long as I have not claimed on the policy. (What’s the point of the insurance if you’re not supposed to claim on it then – but that’s another post).

So let’s look at the numbers: if we assume that my premium stays constant (for the sake of the maths) then over 5 years I would have spent about R22080 on the life cover (R368*60) and I should get an “out-bonus” of about R2208.

Now if I opt for the traditional life cover (with full commission on it) then I would pay R205 pm and if I then took the difference between the 2 premiums (R368-R205 = R163) and stuck that under the mattress for 5 years I would have about R9780 at that stage. And if I went for the real no-commission option then I would have about R13080 after 5 years. Now that would be an “out-bonus”.

So at this stage, I cant see any benefit of using OutsuranceLife or 1Lifedirect…ever!

The numbers dont lie…

Following on from my post last week about direct insurers being so much more expensive than normal insurance companies (even at full commission) I thought I would get a few quotes from them. I asked for R1million life cover for a 44 year old male, non-smoker, top income and health bracket and this is what we got back. We also tried to compare apples with apples and so the premium escalation structure is a simialr as we could get them.

Company Premium
OutSurance Life R 368
1Lifedirect R 374
Instant Life R 178
Altrisk (commission) R 205
Altrisk (no comm) R 150
Discovery (comm) R 283
Liberty (comm) R 375
Sanlam (comm) R 380
Met Odyssey (comm) R 204
Momentum (commission) R 221
Momentum (no comm) R 187

Not only are the direct insurers more expensive than the traditional companies, but they are more expensive even at full commission and they claim to cut out all of that. Would love to hear an explanation from them on this. I think it might be bordering on misleading advertising.

There is only 1 direct insurer that really is cheaper but then you would not yet have heard of them because they have not yet spent millions on advertising – I guess that is why they are cheaper at this stage.

So for my money, if you want to go direct, then go to Instant Life, else use a broker – even at full commission you are better off (by far) than Outsurance or 1lifedirect.

Lies, damned lies and direct insurance!

There seems to be a big drive by the direct life insurers at the moment with vast amounts of money being spent on some very expensive prime time television advertising…Outsurance Life is the latest culprit. The direct insurers may differ slightly but their big claims are all the same…”cut out the middleman”, “no broker, no commission”. The (not so hidden) message is that using a broker is expensive and therefore if you go direct you are going to save because you have got rid of this (unnecessary) expense.

As I have written many times before, go direct by all means, but don’t be naïve about it. Someone (that would be you) is paying for all the expensive advertising and infrastructure. If you are cynical about using a broker then do yourself a favour and get a quote from one of the direct insurers and then get a comparative “commission-free” quote from one of the “traditional” insurance companies. My experience has shown that the direct insurers are even more expensive than full-commission quotes and when we remove the commission from the quote, then they are stupidly more expensive. So much for saving by going direct and cutting out the middleman.

One of the direct insurers even offers a 30-day money back guarantee if you can find a cheaper premium on the same cover. Well here is a news-flash for them. I did a quote on their system and they can offer me R1million for R178 per month. A comparative commission free quote through a traditional insurer for the same cover is R1million is R150 per month (that’s almost 19% more). Interestingly, they have also increased the cost of their cover since I first did a quote. Guess I wont be using them then…

1 Life direct – misleading advertising & so expensive!

Just saw the 1Lifedirect TV advert again this evening and it really gets my goat – their advert is so incrediblymisleading. It should come with a huge health warning similar to that on cigarette packets. They were offering a 44 year old male R1million life cover for just under R500 (if i remember correctly) and at the same time boasting about how cutting out the broker would save up to 22%.

While the 2nd part of the claim may be true, what is distressing is that I can buy R1million life cover through an insurance broker for about R190 per month. If I cut out the commission (broker) then that drops to about R144 per month which is less than 1/3 of what they claim to be able to offer without any commission on it.

What an unbelievable bunch of thieves! They are just like any of the other insurance companies in this country and on top of that, their claims to cut out the paper work could provide you with some very nasty surprises come claims stage.

Based on the quotes above, I would opt for the services of a broker every time – even at full commission.

Sometimes cutting out the middleman just leaves a gaping hole!

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I recently received a marketing offer from 1lifedirect to take out some life cover directly through them, thereby cutting out the paperwork, expensive medicals, the broker and therefore the commission. All of this, they promised, would save me up to 22% on the premiums.

Having seen their rather funny TV adverts and being the curious sort I decided to give them a call to see if things were as good as they promised. After all, their flyer offered me R500000 life cover for only R140 per month (subject to certain terms and conditions of course).

On the face it of their offer sounds quite attractive – but on further investigation it is anything but so. Some comparative quotes to see what I could get elsewhere revealed that I could get R896000 life cover for R128 per month (with full commission on the policy). The same cover without any commission on the policy would cost just R100 per month – now that is a saving of 28% on the full commission quote and is over 50% less than the 1lifedirect quote. So there really is no saving of anything and in fact, sometimes cutting out the middleman could turn out to be quite a bit more expensive.

The 1lifedirect offer is not nearly as good as it initially seemed and far from it being a quick and convenient process they could not give me a quote over the phone because of the fact that I do the occasional scuba dive. The quote needed to be done by their actuaries…7 working days later and still no quote from them despite 2 follow up phone calls from me. By this stage, the average insurance broker would have had the case finalized and issued and I don’t even have a quote. Sometimes going direct is certainly not a quicker or more convenient process.

1lifedirect also say that they cut out the need for expensive medicals – for the record, most medicals are paid for by the insurance company concerned. This is certainly the case where the insurance company is the one that calls for the medicals. Sometimes going direct can mean that you stay ignorant of the facts.

1lifedirect also claim that they cut out the need for paperwork. Far from this being a pro it could turn out to be a real negative the next time you apply for insurance cover; no paper work means that you have no record of what you answered on the medical questions and no record of answers significantly increases the risk of accidental non-disclosure. As a consequence this significantly increases the risk of a claim being repudiated by the insurance company (because of the accidental non-disclosure).

So, far from being “life insurance that is quick and convenient, and that – by cutting out the broker – saves you money!” in my case, the offer by 1lifedirect turns out to be significantly more expensive, not so quick and also potentially increases the risks when applying for future insurance.

For the record, I have no problem with people going direct. To me it is much like fixing the toilet at home – I can do it but it will take time and effort and I might not have the necessary tools. Either I invest the time and energy or I pay a plumber to do it for me.

In the same way, if a broker can’t add value to the client and he/she knows what they want and has the time to do it then there is no reason that they should not go direct.  They just need to be aware that it may not always be the best option and that while in some cases it may appear to be cheaper it could turn out to be a very costly exercise.

Sometimes cutting out the middle man just leaves a gaping hole.

That’s all for now.