We’re proud to announce the commencement this month of our Corporate Partnering program in association with two grassroots sporting clubs.   

HOW IT WORKS 

Our partner program enables these clubs to offer their members access to our life insurance products.  Members that purchase our products get an additional life insurance benefit added to their policy, absolutely free. In addition, for each policy taken up by a member, we contribute a percentage of the premiums to the club. So there’s something for everyone!

Clubs that have signed up this month to participate are Eastern Suburbs AFC (based in Auckland) and Wynrs NZ (Nationally based).

Members of these clubs can now buy our products directly off their club website. Click and see for yourself!

We look forward to a lengthy and mutually successful association with these clubs and to developing relationships with many more!  If your club is interested in partnering with us, please don’t hesitate to give us a call. (Auckland 522-5515 – ask for Steve or Ed) 

A story appeared on Good Returns last Friday that mentioned a traditional NZ life insurer increasing its up-front commissions to over 200%. This means that if you buy one of their policies, the first two years of your insurance premiums goes to the person who sold you the policy, plus a small amount more each year, every year for as long as you hold the policy. I’ve been in this industry a long time and I’ve never encountered commissions this high.

So why would a life insurer do this? And more importantly, why is this bad for the life insurance industry?

Insurers offer higher commissions for one reason only – to fuel their sales. It’s a strategy. They are working on the assumption that insurance brokers will put their own financial interests ahead of the consumer’s. These insurers are betting that their high commissions will sway the broker’s recommendation at the point of sale towards their products. And with commission levels now above 200%, you’d have to say that’s a lot of temptation.

And if the strategy works, what then?

Then consumers will be sold products that carry high commissions ahead of products that best meet their needs. And if that happens, it will be bad for consumers and surely not a good look for the life insurance industry – an industry that struggles with credibility as it is.

The solution?

The best way to stop commissions from spiralling out of control, in my view, is disclosure – a point I made in a previous blog post. Whilst I don’t think disclosure will necessarily drive commission levels way down, I think it will have the effect of making insurer’s intentions transparent. Over time, with disclosure in place, I think insurers will be forced to rethink their commission strategies leading to a convergence of commissions – with all insurers paying similar levels. Insurance brokers will end up with a reasonable commission for the good value they add and commission levels will cease to be a factor in the selling process.

This would be a great outcome for the industry – and even more so for the consumer.

Buying life insurance has always been restricted by geography.  You could only ever buy a NZ life insurance policy if you live in NZ, a UK policy if you live in the UK and so on – you get the picture.

Ask insurers why this restriction has existed and you’ll get several answers – all of them true – along these lines:

• Life insurance is sold by insurance advisers face to face. (Hard to do if you live overseas.)
• Insurance companies require paper-based application forms with signatures and posting documents back and forth between countries is not very efficient
• Life insurance pricing is only valid for a given country.  If you live somewhere else, there are different risks and therefore a different price.  And life insurers only price their products for the local market.

Thanks to the internet, this has all changed.

Pinnacle Life is a New Zealand based life insurer.  We launched our direct life insurance offering to Kiwi’s living in any one of 8 countries: Australia, USA, Canada, UK, Ireland, Singapore, Hong Kong and of course, New Zealand.

The foundations of Pinnacle Life’s unique offering are:

• Debunking the myth that consumers need to be sold  life insurance – consumers are now buying life insurance direct and on-line
• Harnessing the power of the internet to enable instant access to Pinnacle Life’s products from anywhere in the world
• Dispensing with paper signatures.  We’ve made the checking of a box an acceptable way to bind the insurance contract.
• Creating insurance rates that are the same for Kiwi’s living in any one of eight countries.

Whilst Pinnacle Life has launched a world-first in this regard, we don’t think it will be the last.  We think, over time, all life insurance will become the global commodity it should be.

Related posts

Life insurance online, at last!  14 May
Life insurance and kiwis overseas 16 May

Since its launch a few months ago, Pinnacle Life has attracted many customer comments remarking on how easy they’ve found the online products and purchasing process.   Some typical comments… 

“Easy to buy, no hassles, no paper shuffling, no broker appointments, a great initiative”.  Kevin Morris 

“I was surprised how easy it was to read and understand the policy”  Maxine Miller

“The product is straightforward and excellent value for money”. Glenn Myers

I came upon this article which is a good ‘rule of thumb’ to help you decide whether or not you need life insurance.

In summary, it’s useful to think in terms of four different personal circumstances:

1. Single, no kids: you probably have a low need for life insurance.

2. Single, with kids: generally a no brainer… you MUST have life insurance because your kids are vulnerable should you die unexpectedly.

3. Married, no kids: you may need life insurance. Various factors should be considered, such as who is the breadwinner and if there is debt (like a mortgage) that one party alone couldn’t afford.

4. Married, with kids: high need for life insurance to protect your current lifestyle and essentially to keep the roof over your heads.

Think you need life insurance? It’s easy to get covered, especially now that you can buy online, and you might be surprised by the typically low costs.

This story on insurers casting aside doubts on BMI tests appeared in the Herald this weekend. Questions are being asked about the use of BMI in setting life insurance premiums, saying such an indicator is inaccurate.

BMI stands for body mass index and is calculated by taking the persons mass in kilograms and dividing it by the square of the person’s height in metres.

Generally a ‘healthy’ range is around 18.5 to 32. Below or above this range is usually regarded as moving into the ‘unhealthy’ zone. The more unhealthy a person is perceived to be, the higher the risk of an earlier-than-average death and the higher that person’s insurance premiums will be. We’ll put our hands up and say that BMI alone is not a definitive test of health. That’s why insurers look at BMI together with other factors such as smoking, alcohol consumption, drug use, blood pressure problems and cholesterol problems to get a better overall indication. One of the best ways to measure health is the amount of regular exercise that a person does and how fit they are. Problem is that this would require a physical test for all life insurance applicants and this is not always practical. So, unless we find a better way, insurers will continue to use BMI as one of their many indicators of risk.