A DIY approach to life insurance is a risk too far

When structuring your life insurance, just like engineering, expertise matters. That’s why it’s important to seek the right advice when purchasing a policy.

In Australia, expertise is so fundamental to engineering that most states require engineers to be formally registered through a process that demonstrates the experience and competence needed to undertake highly skilled work.

What’s true for engineering is also true in insurance. Engineers understand how important it is to properly account for the risk in their lives as well as their work – and seek to protect their capacity to earn a living and provide for their families by purchasing financial products such as life insurance or income protection.
This is particularly important considering the stresses and mental health challenges engineers can experience. Research commissioned from BIS Oxford Economics and published in the Cost of Doing Nothing report, found that work-related fatalities, injuries or illnesses cost the Australian economy billions of dollars annually, and further research shows industries such as construction, mining and utilities see higher than average rates of depression.
Engineers are, by nature, exceptional at solving defined, technical problems. But managing financial risk is a completely different kind of system. Just as introducing an unqualified engineer into a complex project invites disaster, performing a do-it-yourself assessment of a complex financial system can lead to tax complications, rejected claims and unintended consequences for the insured and their beneficiaries. The result is like a system with multiple points of failure, and no expert to identify the weak points.

Insurance is a technical field that requires accurate calculations to properly safeguard income, assets, and long-term earning potential. Unfortunately, too many people looking to buy insurance imagine they can navigate the market without specialised expertise, asking search engines and generative artificial intelligence systems such as ChatGPT questions that are better answered by a qualified financial adviser or insurance broker.

The perils of conducting your own research

This do-it-yourself approach to life insurance is just as unwise as a building developer who adopts a do-it-yourself approach to engineering. Even highly competent professionals with analytical minds, such as engineers, risk leaving themselves and their families financially exposed through underinsurance or inaccurate disclosures, increasing the risk of claim denial. Purchasing insurance directly without advice may offer reduced underwriting and exclude pre-existing conditions, while group plans, such as those provided through a superannuation fund, are not tailored to individual circumstances.
By utilising a robust and holistic process, a qualified insurance adviser takes a sophisticated and systematic approach to developing advice by gathering the necessary information about a client’s financial circumstances, earnings, assets and expenses, as well as personal circumstances such as career aspirations, children’s educational requirements and caregiving needs.

In addition to recommending a product solution that works for the client, the insurance adviser is also able to recommend coverage levels, including what would be required to ensure the client has sufficient life insurance cover to meet their family’s needs for such expenses as a mortgage, education, and out of pocket costs for medical treatment and changes to costs associated with living. For income protection, the insurance adviser will ensure the coverage is sufficient to ensure lifestyle costs can be covered should the client be unable to work.

The insurance adviser is also equipped to monitor changes in a client’s life that might affect their coverage, such as a change in family circumstances, having another child, or setting up a private business.

PPS Mutual will only allow advisers to become accredited if they meet a strict criteria, and complete a specialised accreditation with them to recommend their products. This recognises the complex financial and insurance needs of professionals like engineers, reflecting the importance of advised insurance rather than attempting the do-it-yourself approach.

Digging into the data

The value of advised insurance can be seen in the claims data. In the year to December 2023, according to the Australian Prudential Regulatory Authority, 97 per cent of individual advised claims for death cover were admitted, compared to only 91 per cent of individual non-advised claims.

Individual claims for total and permanent disability insurance saw 83 per cent of advised claims admitted, compared with 78 per cent for non-advised. For trauma cover, the rates were at 87 per cent for advised and 83 per cent for non-advised, while disability income insurance saw 95 per cent of individual advised claims admitted, compared to 88 per cent for individual non-advised.

And claimants don’t just see better outcomes from advised insurance; they feel better about it too. The Financial Advice Association of Australia’s Value of Advice Index 2025 showed that 96 per cent of participants felt more confident in turbulent times thanks to their adviser.
Advised insurance improves the likelihood of a successful claim due to the advisers’ experience in managing disclosures, definitions and loadings. Policy documents can run to hundreds of pages long, but an insurance adviser is obligated to understand every aspect of the product.

Experience and detail

An insurance adviser has the experience to understand complex considerations such as whether a capability clause, for instance, will affect the outcome of a partial disability claim. And because they’re deeply involved in the industry, they can stay up to date on changes in the industry that might affect premiums and payouts, such as pending mergers, takeovers, company profit, frequency of premium rises or policy administration difficulties.

And in complex cases, having an advisor advocating for you means that you will be represented by someone who knows the insurer and the industry, and has the market intelligence to understand how best to approach a claim. They can maximise a claim’s chances of acceptance using their long-term relationships with insurance providers and a firsthand knowledge of the promises made at the underwriting stage.
This matters immensely for peace of mind, because people usually make insurance claims after experiencing something traumatic. An adviser will focus on your financial security while you focus on your recovery.

As engineers know, expertise can make all the difference when it comes to a successful project – or a successful insurance claim.