Hands up who actually reads their insurance policy documents? You’re not alone. Three in five adults in the UK don’t read the terms and conditions when they take out an insurance policy (according to a report on the life insurance sector by global market researchers, Mintel in 2005.)

Not much has changed since then. Part of this has to be that insurance policies are often tough to digest, littered as they are with complex language and clauses. What makes this worse is the fact that there is absolutely no need for it. (It’s a recurring theme from us but I’ll say it again – life insurance has always been a simple product, it’s just that traditional insurers have done a great job making it complicated.)

Pinnacle Life has completely rewritten all its life insurance documents so that when you buy a policy you can understand exactly what you are getting, without needing a PhD in insurance! Gone is the insurance-speak and the legal mumbo jumbo, so no need for an expert to guide you through it.

Check out our sample policy document on the Pinnacle Life website . You’ll see what I mean.

That’s the question asked by UK site Private Healthcare UK in a lead article on insurance today.  It seems that UK insurers argue that electronic underwriting and getting cover online is impossible.  Well, Pinnacle Life has proved them wrong.   

Here’s a taster of what the article says: 

Life insurance Hot Topic, May 2007 

“If a small New Zealand life insurer can do it, why don’t UK insurers do it?  Web sites with instant quotes are common, although too often the price is only an indication until the insurer has your completed proposal form. Web sites where you can get your policy emailed to you as a full legal document, instantly, are as rare as hen’s teeth.”

“You can do it for airline and theatre tickets, and other services, why not insurance? “

“…We have road-tested the Pinnacle site and it does exactly what it says on the tin – quickly and efficiently. You even get to fully preview a printable copy of your own policy before being asked for payment.”

“…If health and life insurers really do want to sell to the younger generation then they had better start getting on the same technology wavelength as potential customers.”

“…So who will be the first UK health insurer to rise to the challenge??” 

See the full story on the website Private Healthcare UK…

Pinnacle Life was profiled by Ulrika Hedquist in Computerworld. 

The article reads…

“Clients can buy up to $500,000 in life cover immediately online, says the Local insurance company. Pinnacle Life has launched a service selling life insurance online.   “You apply online, we issue the insurance online and the whole process is pretty much immediate,” says Ed Saul, partner at Pinnacle Life and former CIO of Tower Insurance. In 10-15 minutes the entire process of buying life insurance is completed, says Saul. He calls it “a revolutionary new way of buying life insurance”.  “It’s gone from days to minutes,” he says….” 

See the full article on Computerworld website…

It’s appropriate that the Government Actuary is taking a hard line on trail commissions for KiwiSaver, as reported on money management site Good Returns today.

The same stance should be taken for the life insurance industry. Currently traditional NZ insurers pay trail commissions to the adviser who has sold the insurance policy. The “trail” part means the adviser is paid a percentage of the premium EVERY YEAR for the life of that policy.

That’s potentially thousands of dollars added to the cost of the product – costs that are paid for by the policy holder.

That’s why Pinnacle Life doesn’t pay trail commissions. We pay advisers a one-off fee for advice which results in a consumer buying a Pinnacle Life policy.

Only fair when it’s a one-off piece of advice.

In New Zealand’s Sunday Star Times at the weekend, a quick comparison of life insurance prices by journalist Rob Stock suggests that Pinnacle Life’s online product is the best priced in the NZ market.

It’s no surprise to us since offering life insurance online cuts out layer upon layer of the traditional administration and distribution costs – costs which we don’t have to pass on to the consumer.

Rob compared Pinnacle Life with the average prices of 10 traditional NZ life insurance companies. Quotes are based on a male, non-smoker seeking $300,000 cover.This was the result, as published in the Sunday Star Times print version (20 May 2007):

Remember, you pay these amounts month after months, year after year. There’s no good reason to pay more for your life insurance than you need to.

For more on the story check out the e-article on Stuff.

Regular visitors to this blog will know that we’re all about giving consumers an option to buy life insurance direct and online. So, you might ask (and people do!), where does that leave the Independent Financial Adviser, the traditional channel for consumers to buy life insurance?

The people who are currently buying life insurance online are comfortable using the internet and confident in their ability to make financial decisions. Others prefer to have their hand held as they may not be confident in what level or type of cover they need or are uncomfortable in making online transactions and that’s fine.

We actually work with a number of Independent Financial Advisers and Mortgage Brokers who recommend our product if they think it’s right for their clients.

Where we differ from other insurers is in terms of the fee structure. This isn’t as open in New Zealand as it is in Australia, where there are laws about disclosure of commission, but every traditional insurance company pays a commission to the Adviser selling the policy. Note that this commission is on every payment, for the life of the policy!

Pinnacle Life’s referral fees to financial advisers and mortgage brokers are less than half the commissions paid by the traditional insurers. So those Advisers and Mortgage Brokers recommending our products aren’t doing it for the money, they are doing it to get the best deal for their clients.

So why don’t all Advisers offer our products? You might want to ask them.

Wikinews yesterday globally announced the launch of the Pinnacle Life website as a world first.

Here’s the story… 

Wikinews May 15, 2007

The first website in the world allowing consumers to buy life insurance online instantly has been launched today, targeting specifically New Zealanders. 

The website, run by life insurance company Pinnacle Life, allows New Zealanders in many countries in the world to buy life insurance online without the need for a medical examination.  Once the application has been approved, which is done immediately, the consumer can receive a $500,000 life insurance policy via an automatic e-mail….click here to see full story on Wikinews

The official launch of the Pinnacle Life website was reported in the NZ Herald online yesterday.  No mention of the blog, but the two sites go hand in hand when it comes to shedding some light on life insurance for consumers. By the way, picking up a theme from the Herald article – it’s 46 clicks! The story… 

NZ Herald  1:20PM Tuesday May 15, 2007 New Zealanders can now get life insurance cover at the click of a mouse. Well, maybe a few clicks. Pinnacle Life today launches a website that allows consumers to buy immediate life insurance cover online. Pinnacle Life senior partner and architect of the new venture, Ed Saul, said, “We’re giving consumers a quicker and easier way to buy life insurance. Instead of submitting an application form and waiting days for a policy to be approved and issued, we do it online and we do it immediately.”  

HOW IT WORKS 

The entire process from application to policy approval is fully electronic with consumers receiving their policies online, instantly. Visitors to the simple e-fulfillment site are greeted by an intuitive interface, which leads them through a series of typical insurance questions regarding age, health and occupation.  The process takes less than ten minutes, by the end of which full and immediate cover up to $500,000 is granted without the need for a medical examination, unless certain specific conditions are highlighted.  

ends 

We’ve had an excellent response to our launch yesterday.   We obviously don’t want to post every comment received (and still receiving), but here’s a couple that represent the tone… 

Just wanted to say congrats on the website. Its fantastic to see someone get online insurance sales right and set a new industry benchmark.I wish you guy’s all the success that this site deserves.Kind regards
Barry Read    May 16, 11:01 AM 

Nice work guys. Good luck with the online business. Martin Gould   May 16, 9:03 AM

Received the following from a reader yesterday…

“Kiwis are all over the world and while it is refreshing to see a NZ company thinking outside the box and the country, why are you restricted to only a few countries?”

If you haven’t seen the Pinnacle Life website it tells you that Kiwis living in Australia, UK, Ireland, Canada, US, Hong Kong and Singapore are all entitled to buy life insurance policies from Pinnacle Life online. The reader didn’t leave a name, but thanks for the question anyway. The answer…Together with our reinsurer Hannover Re, we have identified these 7 countries as having reasonably similar mortality risk to New Zealand. This means that our product and pricing can be standardised across these countries, simplifying our distribution. And at the same time, there is a good chance of us being able to source medical or death records in English, should they be needed either now or in the future.At some point we may venture beyond these countries, but then we may need to offer differential pricing. This is something we could look at later, based on demand.