Choice wants key fact sheets introduced for life insurance products to help consumers understand them better.

Fact sheets for some general insurance products and home loans help people compare products, the consumer advocate says in a submission to the Parliamentary Joint Committee on Corporations and Financial Services’ life insurance inquiry.

“The goal of a properly functioning market should be to assist product comparison, to drive competition and ultimately deliver products that are better aligned to consumer need.”

Choice says there is currently no consistent way of presenting information in life insurance product disclosure statements.

It concedes that because key fact sheets are still relatively new, there has been little opportunity to check their effectiveness.

“However, the preliminary research indicates consumers who use them benefit, although there are still problems with awareness of their existence.

“A study into the use of key fact sheets for home loan products found they effectively enhanced a consumer’s ability to identify the cheapest loan package from among several alternatives. Although the study demonstrated low levels of awareness among consumers of the existence of the sheets, it showed this was likely due to poor levels of information provision and staff training.”

Choice says shadow-shopping exercises show consumers are unlikely to be given fact sheets unless they ask for them.

“This indicates mandatory requirements for businesses to provide useful information at key points in consumer decision-making are necessary for effective disclosure measures.

“The document should be ‘pushed’ to consumers, rather than requiring consumers to search and ‘pull’ the information themselves.”