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.
Want The Quality of Retail Life Insurance,
With The Convenience of Direct?
Compare personalised quotes from leading Australian insurers. Eligible new policies include a minimum 12.5% premium return.
Compare QuotesGeneral advice only. Consider the PDS before deciding.
Frequently Asked Questions
What does a funeral policy cover? +
A funeral policy typically pays a lump sum when the insured person dies, intended for funeral and final expenses. Retail life insurance or seniors cover may offer more comprehensive cover at a better price.
Are funeral insurances worth it? +
Funeral insurance can be worth considering if you need a small amount of cover, want fast approval, and may not be eligible for traditional fully underwritten cover. The key risk is value over time - funeral cover is often very expensive for the amount insured, and premiums can add up to more than the benefit amount. If you can qualify, comparing against retail/advised life insurance may offer better value per dollar of cover.
What are the pitfalls of funeral plans? +
Disadvantages can include:
• Higher premiums (often poor value per $1,000 of cover)
• Fewer options / less flexibility than retail policies
• Simplicity upfront, but greater reliance on checks at claim time
What is the average cost of funeral insurance in Australia? +
Funeral insurance can be multiple times more expensive per $1,000 of cover than retail policies, and costs vary widely depending on age and sum insured.
How to compare funeral insurance policies online? +
When comparing policies, consider:
• Premium cost vs benefit amount (value per $1,000 insured)
• Waiting periods and payout conditions
• Claims experience indicators (where available)
• Product flexibility (features you may miss vs retail)
• Whether you qualify for retail/advised cover instead
Can a 70 year old have life insurance? +
Often yes, but eligibility and pricing depend on the insurer and underwriting. Many retail policies have lower maximum entry ages (up to 75 for some insurers) than seniors or funeral products - so direct products can be more accessible, but often at a higher cost.
Why is direct insurance often more expensive? +
While adviser-quality policies include commission in premiums, direct products fund large marketing campaigns and call centres, and those costs are built into pricing. The trade-off is speed and simplicity versus long-term value.
What's the difference between funeral insurance and retail life insurance? +
Funeral insurance typically offers smaller cover amounts (often $3,000-$15,000), minimal underwriting, and is designed for quick, simple sales.
Retail life insurance generally provides larger sums insured, more comprehensive underwriting, broader product features and flexibility, and often better value per $1,000 insured.
Are claims outcomes different between direct and adviser policies? +
Yes. Industry statistics show adviser-sold policies have higher claim acceptance rates, adviser-led claims are typically processed faster, and direct channels have higher dispute rates. Simplified underwriting at application often means more checks occur at claim time.
Is seniors insurance better than funeral insurance? +
They serve different purposes. Seniors insurance generally provides higher cover amounts than funeral insurance but still uses simplified underwriting. Both are designed for accessibility at older ages - but premiums can be higher compared to fully underwritten retail policies.
Can you get funeral or seniors insurance without medical exams? +
Yes. Most direct funeral and seniors policies do not require medical tests for many of the applicants. However, limited upfront underwriting means insurers may review medical history more closely at claim time, and waiting periods for natural causes are common.
What are the main disadvantages of direct insurance? +
Common trade-offs include:
• Higher premiums
• Lower claim acceptance rates
• Fewer product features
• Limited maximum cover amounts
• Less flexibility
The convenience is real - but so is the cost.
What should I compare before choosing funeral or seniors insurance? +
Before applying, consider:
• Total lifetime premium cost
• Claim acceptance rates
• Waiting periods
• Maximum cover available
• Product flexibility
• Whether a retail alternative is available
Convenience is valuable - but understanding the long-term cost is essential.
Research Sources
Product information sourced from publicly available insurer websites. Reviewed February 2026.