The Cost of Convenience: Is Direct Life Insurance Worth 4x the Price?
25 Feb 2026 • General Knowledge
It is clear that life insurance provides an important financial safety net for many people, yet the prospect of having to decide what's needed and going through the application process can be daunting. The convenience of being able to have it all sorted in under an hour is highly attractive to many.
But convenience comes with trade-offs.
What is less clear are the costs of this convenience. For example - premiums can be double, claim decline rates can be double, and product features can be halved.
This article looks at the different types of direct insurances, and how they compare to retail / advised insurance - looking at both the convenience as well as the costs.
The Rise of Direct Insurance - and Why You Should Be Cautious
Turn on the TV during the day or scroll Facebook, and you'll be bombarded with life insurance ads. These products are generally much simpler than retail policies and are sold direct to consumers (thus their name) with limited underwriting at the point of sale, often with:
- No medical checks and limited lifestyle or health questions
- Guaranteed acceptance, in some cases
- Policy issuance is fast and over-the-phone
There are three main types of direct insurance:
Funeral cover
- Provides a small amount of cover to ease the financial pain on death
- Sums insured often between $3,000 and $15,000
- Offered at higher ages, from say 40 years up to 85 years
- lowest level of underwriting, often with no medical tests required
Seniors insurance
- Provides a reasonable amount of cover (between $100k and $250k)
- Sums insured often between $3,000 and $15,000
- Offered at higher ages, with entry age often between 40 and up to age 79
Term insurances
- Offers life, TPD, IP
- Entry age can be much lower (18 years)
- Larger SI starting at a maximum 1m or 1.5m at the lower ages and reducing with age.
- More intensive underwriting is required, however the need for any medical tests is still limited.
⚡ Speed & Simplicity
The simplicity of the products, and the ease and speed at which cover can be obtained, make this attractive to many people. And the reality is this has meant that some people have taken out much needed cover who wouldn't have done so otherwise - which can only be a good thing
🗝️ Access
Another attraction is the “availability” - with the decline in financial adviser numbers, coupled with increasing regulatory burden, finding an adviser who is willing to help, particularly for covers with smaller premiums, has been increasingly difficult in recent years. Whilst there has been an increase in the number of people offering products under a general advice model, the level of new business volumes would suggest there is still a bottle neck for access.
👵 Higher Entry Ages
And there is the age at entry - many retail policies restrict entry to those under 70 or 75, whilst seniors and funeral covers are specifically aimed at the higher ages.
1️⃣ The Cost of Cover
When comparing life insurance premiums, Adviser-quality cover often provides far better value: Whilst retail covers have commission included in the premiums, direct insurance offerings need to pay for expensive advertising campaigns (think of those TV ads) and call centres.
We did a spot check on the cost of term insurance cover from two of the leading direct providers and compared it against four retail policies. Whilst the relativity in pricing will vary based on age and sums insured (as well as health and other underwriting questions), the table below highlights the stark gap.
| Policy Type | Avg. Annual Premium | Example Cover |
|---|---|---|
| Adviser-Quality Life | $146 - $270 | $250,000 |
| Direct Term Insurance | $514 - $627* | $250,000 |
Note: This example is for death only and uses a male, non-smoker, age 45 in a clerical job with no health issues. Prices will vary based on age, health, and sum insured selected. Figures are based on real quotes as at February 2026.
*Prices shown are before Keep's Cash Back rebate, which effectively reduces premiums by 12.5%.
Another example of the relative cost of cover is below. Demonstrating the gap is even wider for funeral insurance, where the cost of cover can be 5-10x higher than retail policies on a per $1,000 of cover basis.
| Policy Type | Avg. Annual Premium | Example Cover |
|---|---|---|
| Adviser-Quality Life | $385 | $100,000 |
| Direct Insurance | $625 | $100,000 |
| Funeral Insurance | $736 | $10,000 |
Example: Male, non-smoker, age 56, clerical occupation. Prices vary. Sources: Finder Dec '24.Canstar (April 2025).
2️⃣ Claims Outcomes Matter
The simpler upfront process for direct insurance means there is a greater reliance on checks done at claim time, such as reviewing disclosure of pre-existing conditions. This “back-ending” of the underwriting is potentially one of the key reasons claims outcome statistics are less favourable for this type of policy.
According to the Australian Prudential Regulation Authority (APRA):
- Retail-advised policies have a higher claim acceptance rate of 97.2%
- Direct policies only hit 92.9% acceptance
- Adviser-led claims are processed faster, averaging just 1.3 months
- Direct and funeral policies experience more disputes, often due to confusing legal terms or fine print
| Cover Type | Channel | Acceptance Rate | Avg Claim Time (months) | Disputes /100k | Policy Cancellation Rate |
|---|---|---|---|---|---|
| Death | Adviser | 97.2% | 1.3 months | 12.8 | 16.4% |
| Death | Direct | 92.9% | 1.6 months | 21.7 | 12.6% |
| Death | Through Super | 98.4% | 0.8 months | 1.1 | N/A |
| Funeral | Direct | 99.8% | 0.6 months | 45.5 | 4.7% |
Source: View APRA's latest life insurance statistics
3️⃣ Product Flexibility
The simpler direct products (and therefore much shorter PDSs) make them better suited to quick sales over the phone, but that means that various options and flexibilities which exist in retail policies are simply not available. The most obvious example is the level of cover which is available - direct products often have limited maximum cover amounts whilst retail covers can, where appropriate, provide much higher sums insured.
Whilst direct products have some included benefits, such as terminal illness benefits and advanced funeral benefits, retail policies have a larger range of built in benefits for no additional costs, such as:
- Grief counselling
- Financial planning assistance for beneficiaries
4️⃣ 2018 Royal Commission Findings
The nature of the product (principally being able to be sold over the phone in just one call) has meant that it has been open to abuse. The 2018 Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry uncovered major issues with these products such as low payout ratios, high cancellation rates and predatory sales practices, and whilst a lot of effort has been made to address these issues, the nature of the policies means they will inherently be at higher risk going forward.
👉 See more detail at our blog post on Life Insurance for Over 50's
Final Word: Convenience Has a Cost
There is a clear convenience factor that direct products bring - simpler products which are easier to understand, easier sales processes which can be done over the phone - but there is a cost to this convenience - more expensive products, less certainty at claim time, fewer options to choose from, and historically poor customer experiences.
Whether you have a direct policy already, or thinking about getting one - its always worth having a look around before committing to see what cover is available elsewhere. There are plenty of websites (including our own) which offer free quote comparisons between different retail insurers, and some (including us) that offer commission cashback deals which make it even cheaper.
But consumers should weigh the benefit of the convenience with:
- Higher premiums
- Lower claim acceptance rates
- Fewer options
- Historical customer experience concerns
Whether you already hold a direct policy or are considering one, it's worth comparing alternatives before committing.
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Frequently Asked Questions
Research Sources
Product information sourced from publicly available insurer websites. Reviewed February 2026.