Direct Insurance is an insurance company that does not work with insurance brokers or insurance agents. Typically direct insurers sell their products through contact centres (also called call centres) or online through a website.
There are more direct insurers in non-life insurance business (e.g. home, auto, travel insurance) than in life insurance (e.g. life, disability, critical illness, health insurance) due to the nature of the life insurance business that requires more attention to the assessment of each case (e.g. completing health questionnaires, medical exams etc.). Nevertheless there are direct insurers who also sell life insurance.
Often there is a perception that direct insurers have lower premiums due to the fact that they do not have to pay sales commissions (e.g. to insurance brokers). In reality, that is not always true since it also costs a lot of money to run a call centre with all call centre staff and technology infrastructure.
Direct Insurance: Expert Opinion
There are a few different ways you can buy a policy. One is through a broker, who is an independent broker that works with all the different companies. Then there is a captive agent, who works with just one company, generally speaking. The person looking to buy a policy can also buy direct from the insurer.
A lot more companies are starting to go this route: Manulife, BMO, RBC – they all have direct offerings. They all also use independent brokers as well.
The direct offering generally doesn’t save the policy holder any money; and in fact, in many instances, it’s more expensive than using a broker.
The advantage of using a broker over a direct offering is that the broker can analyze your needs to determine if that is the type of policy you would need. A lot of times, with a direct offering, someone will go online looking for $500,000 of term life insurance coverage without really knowing what they need.
That is the advantage of working with an insurance broker. They can determine what you need and, generally speaking, they can find you a better deal than a direct offer as well.
Our Publications related to Life Insurance
Life, Disability and Critical Illness Insurance: Do Men or Women Pay More?
Introduction There were many articles written about men paying more for car insurance than women, but what about other insurance types? Do women always benefit from lower insurance rates? We took on this question and systematically went through various life insurance, disability insurance, and critical illness insurance by consulting with professionals who had the answers. […]
Introducing a New Tool to Find Out What Issues Canadian Face with Their Insurers
The arrival of COVID-19 has pushed Canadians, more than ever before, online for finding and applying for insurance and banking products. It is not easy, though, to make the right choice without knowing if a particular insurer will be there when you need them the most. As the largest Canadian review platform with thousands of […]
If Life Insurance Plans Were Cars: How to Look at Various Types of Life Insurance in Canada
Overall, insurance is considered a somewhat boring, though necessary, topic. On top of that, it is not always clear – there are plenty of various types of life insurance products in Canada that work differently. I decided to explain it in a bit of a different and funny way – I hope that you will […]
Insurance Companies in Canada – Easily Explained
The life insurance landscape in Canada is quite unique. The infographic below shows all the key players and their size, reflecting their assets under management (AUM) based on life and wealth segments of the company’s business. scroll further down to continue reading In Canada, the majority of insurers fall under the umbrellas of three large […]
What is Travel Insurance, and Why Do I Need it?
By RateHub.ca When it comes to budgeting for your vacations, travel insurance is one of those things that’s often overlooked. It’s easy to understand why: we have publicly funded healthcare in Canada, so many people assume that benefit applies to wherever we travel in the world. Unfortunately, that’s not the case. The cost of seeking […]
