Life insurance has historically been a cornerstone of financial advice in Australia. It represented not just a product, but a fundamental layer of protection—ensuring that individuals and families could maintain financial stability in the face of unexpected events.
Yet over the past decade, the role of insurance within advice practices has shifted dramatically. Regulatory reform, reduced remuneration, and increased compliance requirements have made it more difficult for advisors to deliver insurance advice efficiently and profitably. As a result, many advisors stepped away from the space entirely.
In this discussion, however, a different narrative begins to emerge. While participation in insurance advice has declined, the need for it has only increased. What becomes clear is that the industry may now be at a turning point—one where advisors are beginning to re-engage with insurance, recognising both its importance and its opportunity.
The last 5 to 10 years have been particularly challenging for life insurance advice.
A series of legislative changes—including reforms to remuneration structures and increased educational requirements—have reshaped the landscape. These changes reduced profitability and increased the complexity of delivering advice, particularly in comparison to other areas such as investment management.
For many advisors, the cumulative impact was significant. Faced with rising compliance demands across all areas of advice, insurance became difficult to justify from a time and cost perspective.
The result has been a sharp decline in participation. While there are thousands of licensed financial advisors in Australia, only a small proportion are actively writing the majority of new insurance business.
At the same time, overall new business volumes have fallen, reflecting both a reduction in supply of advice and the increasing barriers to entry.
However, this contraction does not reflect a reduction in need. If anything, the opposite is true.
For many holistic advisors, stepping away from insurance was not a reflection of its importance, but a practical response to competing pressures.
As regulatory requirements expanded across the entire advice process, the additional time and effort required for insurance advice became difficult to sustain. In some cases, practices outsourced insurance entirely. In others, it was deprioritised in favour of more scalable services.
Now, that trend is beginning to reverse.
Advisors are increasingly recognising two key realities. First, clients still need insurance—perhaps more than ever. Second, avoiding the conversation does not remove the responsibility.
In a holistic advice framework, risk protection is not optional. It is a fundamental component of acting in a client’s best interest.
As a result, many advisors are re-engaging gradually. Some begin by supporting claims, others by referring clients to specialists, and some by rebuilding internal capability over time.
This staged approach reflects both the complexity of the space and the opportunity it presents.
If there is one moment that defines the importance of life insurance, it is the claims process.
Across the discussion, a consistent theme emerges: advisors who support clients through claims gain a fundamentally different perspective on the value of insurance.
In these moments, insurance shifts from a theoretical concept to a tangible outcome. It is no longer about premiums, policy structures, or compliance requirements—it is about providing financial support during some of the most difficult periods in a client’s life.
For clients, the impact is immediate and profound. Claim payouts often provide the financial stability needed to navigate illness, injury, or loss. For advisors, these experiences reinforce the purpose of their work.
In many cases, clients who receive claims become strong advocates for both the advisor and the advice process, strengthening long-term relationships and trust.
This highlights a key insight: the true value of insurance is most visible when it is needed most.
At the same time, the nature of risk—and therefore insurance claims—is evolving.
Historically, claims were often linked to physical or catastrophic events, particularly in industries with higher levels of physical labour. Today, there is a noticeable shift toward more complex and less visible conditions.
These include mental health challenges, chronic pain, and long-term illnesses that may not have clear diagnostic markers. This evolution presents new challenges for both insurers and advisors.
Existing products—particularly Total and Permanent Disability (TPD) insurance—have not always kept pace with these changes. As a result, there is growing recognition that product design may need to evolve to better reflect the realities of modern claims.
This shift underscores the importance of advice. As products become more complex and risks less visible, the role of the advisor in guiding clients becomes even more critical.
One of the most concerning trends highlighted in the discussion is the widening protection gap.
Legislative changes such as Protecting Your Super and Putting Members’ Interests First have significantly reduced default insurance coverage within superannuation. While these reforms were designed to protect consumers, they have had the unintended consequence of leaving many individuals underinsured.
For advisors, this represents both a challenge and an opportunity.
A large portion of the population now has insufficient coverage—often without realising it. Addressing this gap is not only commercially valuable, but also central to fulfilling an advisor’s duty of care.
In this context, insurance advice becomes more than just a service offering. It becomes a critical component of protecting client outcomes.
Life insurance occupies a unique position within financial advice because it intersects three key responsibilities.
From a legal perspective, advisors are required to consider risk protection as part of holistic advice. Failing to address this area can create compliance risks.
From an ethical standpoint, protecting clients and their families is fundamental to acting in their best interest. Financial advice is not just about wealth creation—it is about safeguarding financial wellbeing.
From a commercial perspective, insurance can enhance the sustainability of a practice. It provides recurring revenue, strengthens client relationships, and increases the overall value of the business.
Practices that integrate insurance effectively tend to be more stable and more deeply embedded in their clients’ lives. They also benefit from stronger intergenerational relationships, particularly when insurance strategies extend to family members.
This combination of legal, ethical, and commercial factors reinforces the importance of re-engaging with insurance advice.
For advisors looking to return to the insurance space, the discussion emphasises that the process does not need to be overwhelming.
Rather than attempting to rebuild full capability immediately, advisors can start with incremental steps. This might involve improving processes, leveraging available tools, or focusing on specific areas such as pre-assessment.
One of the most impactful improvements is the introduction of structured pre-underwriting processes.
By using health questionnaires and pre-assessment tools before meeting clients, advisors can significantly improve efficiency. This approach reduces time spent during meetings, enhances the quality of recommendations, and increases client commitment to the process.
It also improves conversion rates and reduces the overall cost to serve.
These practical changes demonstrate that re-engaging with insurance is not about complexity—it is about process.
Despite the availability of tools and improved processes, one of the biggest barriers to insurance advice remains psychological.
Many advisors feel uncomfortable asking clients detailed questions about their health and personal circumstances. However, the discussion highlights that client discomfort is often a reflection of advisor confidence.
When questions are asked professionally and empathetically, clients are generally willing to engage openly. In fact, many appreciate the opportunity to discuss these topics in a structured and supportive environment.
This reinforces a broader insight: success in insurance advice is driven as much by communication as it is by technical expertise.
Advisors who can navigate these conversations effectively are better positioned to deliver meaningful outcomes.
The life insurance advice sector is at a critical inflection point.
After years of disruption, the environment is beginning to stabilise. At the same time, the need for advice is increasing—driven by reduced default coverage, changing risk patterns, and growing financial complexity.
For advisors, this creates a clear opportunity.
Re-engaging with insurance does not require immediate perfection. It requires a willingness to start—whether through referrals, claims support, or gradually rebuilding internal capability.
Ultimately, life insurance is not just another component of financial advice.
It is the part that matters most when everything else goes wrong.
And for advisors willing to return to the space, it offers not only commercial benefits, but the opportunity to deliver the most meaningful impact in a client’s life.