Australian’s have taken a keener interest in life insurance over the past 12 months, and protection levels have increased substantially, according to TAL.
The insurer’s second annual Australian Financial Protection Index revealed a 38% jump in the overall score, up from 24.2 in 2013 to 33.5 (out of 100). The Index is used to analyse Australian’s perceptions of underinsurance across the four major forms of life insurance (life, critical illness, disability and income protection).
More than 1200 Australians were surveyed on the types of life insurance they held, as well as if they felt they had enough cover if they, or their partner, could no longer work. The results were modelled to calculate a score from 0 to 100, where 100 indicates that people have each form of life insurance and that they believe they have adequate coverage.
Of all the demographic groups researched, Generation X (aged 35-49), higher income earners, those with children at home, those with mortgages and those who declared themselves as ‘risk takers’ scored the highest index results at around 40 out of 100.
The number of people with a score of between 70 and 100 almost doubled this year, rising to 14% of the population, while the number with a score of zero dropped one third from 30% to 20%.
TAL attributed the increased interest in life insurance to improved awareness, consumers becoming more active in their financial affairs, and younger generations taking matters into their own hands via the digital world. It said that while the majority of Australians still do not believe they have enough financial protection, the gap is slowly closing.
TAL Chief Customer Service and Operations Officer, Penny Coates, said: “Take-up of life insurance has continued to increase, particularly through superannuation, but the low scores reflect that on the whole there is still a substantial gap between the level of cover that people think they need and the level of cover they actually have.
The challenge for the industry is to convert awareness of the problem into action to address the issue
“The challenge for the industry is to convert awareness of the problem into action to address the issue, and the TAL Australian Financial Protection Index is a tool to help us do that.
“20% of people still have no life insurance and acknowledge this is not an adequate situation, which is very worrying. Even more concerning is the fact that lower income earners make up a large percentage of those who are most underinsured, yet these are the very people who can least afford the financial pressure which comes with the death, illness or injury of a member of the household.”
The 2014 Index results are being released as part of a new initiative developed by TAL, called Voice for Life. The insurer said this initiative will better inform and educate customers and the broader community about the crucial societal role of financial protection.
How the data in this article warrant a heading of ” Australia’s Protection Levels Increasing” is beyond me.
1. “Take-up of life insurance has continued to increase, particularly through superannuation, but the low scores reflect that on the whole there is still a substantial gap between the level of cover that people think they need and the level of cover they actually have.”
A better title might be ” Australians continue love affair with self-delusion”
Many of those people whose cover has increased via super don’t even know that it’s increased, or, in some cases, don’t even know they have cover at all…..
27 years ago when I started in this great Industry, I was shown a diagram of a funnel with Income and assets pouring in the top and cash pouring out through the thin spout at the bottom,
which was not a problem if the spout did not widen.
It seems that the amount of income flowing in through the top of the Insurance empire, is growing but the amount pouring out of the sides and the bottom has grown faster, leaving less in the kitty to cover the necessary things.
It is great that more people have some cover though it defeats the purpose if it is the wrong cover, or the good is being replaced by the bad and at claim time, the result is the loss of life savings, investments and the home.
The lower income part of society will always not be sufficiently insured, that is a fact of life, though some cover for them is better than nothing.
The middle class is and always will be the engine room of our economy and they are the ones that must be properly covered with appropriate advise and products that will protect them and their families, as after all, they pay the most taxes and deserve relevant Insurance that will enable them to preserve what took a life time of hard work to achieve.
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