The Association of Financial Advisers (AFA) wants direct and group life insurers to help consumers make more informed decisions on cover.

In a submission to the Parliamentary Joint Committee on Corporations and Financial Services’ life insurance inquiry, it says only financial advisers provide this service.

“This is a statutorily imposed requirement of section 947D of the Corporations Act 2001 and has existed for more than a decade,” the AFA says.

“People who acquire their policies via group or direct channels do not receive the same comparison information and therefore are prevented from making informed decisions when they already hold life insurance.”

The AFA wants the same conditions applied regardless of the distribution channel. It wants all consumers to receive fact sheets that outline the differences between current and proposed policies.

“This would not require life insurance staff to provide personal advice to a customer, because mere possession of personal information does not mean personal advice is provided.

“Instead, factual information about a customer’s existing policies should be required to be obtained by sales staff before proceeding with a sale.

“That information should be presented in a factual comparison for the customer to consider before deciding to proceed with the offered policies.”

The AFA says a consumer’s decision to consider switching policy should be the trigger for a comparison fact sheet.

“This measure can substantially improve the welfare and decision-making of policyholders by arming them with information they may not have been aware of. It will also ensure that enquiries are made into a policyholder’s existing insurance policies, slowing down the process a little to allow consideration of the effect of replacing existing policies.”