The direct life market is starting to impinge on the adviser distribution channel as products grow increasingly similar, according to new research by Plan For Life.

Direct insurers are winning and retaining customers by offering rewards such as periods of free cover, loyalty discounts and frequent flyer membership, the report says.

Price is also being used to win market share.

For a 30-year-old client with $250,000 of cover, direct life premiums are 25% cheaper than a similar adviser product, the report says. For a 45-year-old with the same cover, the difference is 60%.

Direct trauma policies with $200,000 of cover were 30% and 20% cheaper respectively for the same age groups.

Direct insurers take several approaches to the risk of insuring clients with limited underwriting, including selecting “the best prospects by combining implicit underwriting, excluded ages and benefit types”.