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Nikita Trainin

Nikita Trainin

Financial Adviser

The Hidden Costs of Convenience: What to Watch Out for When Your Bank Offers Insurance

In my experience, working in both the banking and insurance industry for over 15 years, I became aware of the differences in processes and policies when it comes to personal insurance.

When a bank offers personal insurance, it can be tempting to take them up on the offer due to the convenience and familiarity of already having a relationship with the bank. However, it’s important to be aware of the potential drawbacks of getting personal insurance from a bank.

One thing to remember is that banks are not Insurance Companies. When the bank offers insurance, they essentially act as an agent or a salesperson for the Insurance company under the brand of the bank. So the insurance policies that the bank offers are generally basic “blanket cover”, which doesn’t cover the personal situation. The principle is “Would you like fries with it?”

One major drawback is the limited coverage options offered by banks. Banks may only offer a limited range of insurance products, which can make it difficult for customers to find the coverage they need. Bank may offer only basic cover but not comprehensive cover. Banks may not have insurance experts on staff who can provide customers with detailed advice and guidance on insurance coverage. This means that customers may not be able to get the information they need to make an informed decision about their insurance coverage.

Another concern is the pricing of insurance coverage offered by banks. Banks may charge lower prices for insurance coverage than insurance companies. This is because banks may not have the same level of comprehensive coverage or they don’t use independent insurance advisers. It’s important to shop around from multiple providers to ensure that you are getting the best fit for your situation on insurance coverage.

It’s also important to be aware of the potential conflict of interest when getting insurance from a bank. Generally, the banks sell only their bank-branded products.

In the past banks used to have their basic insurance products. Nowadays, a lot of banks are moving their focus back to banking and selling their insurance portfolios to specific Insurance companies. For example, in recent news, Westpac Bank has completed the sale of NZ business to Fidelity life.

When considering getting personal insurance from a bank, it’s important to be aware of these potential drawbacks and to thoroughly research and compare different insurance options and providers. Don’t rush into a decision and take the time to understand your needs and the options available to you. It’s always recommended to consult with an independent financial advisor to help you make an informed decision about your insurance coverage.

With that in mind, it’s important to review and update the old cover to ensure it is suitable for your situation.

A financial advisor like myself can help you understand your insurance needs, compare different insurance companies, and recommend the coverage that is best for you. They can also help you navigate the claims process and ensure that your claims are handled quickly and efficiently.

In conclusion, getting personal insurance from a bank can be convenient and familiar, but it’s important to be aware of the potential drawbacks. It’s essential to consult with an independent financial advisor to provide unbiased advice and guidance. Feel free to get in touch

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