Insurance Understanding Does Not Lead to Purchase

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The majority of Australians understand the importance of life insurance but this is still not translating into action, a new survey from TAL has found.

Outgoing TAL Group CEO, Jim Minto
Outgoing TAL Group CEO, Jim Minto

The survey, which measured consumer attitudes towards life insurance, found that 79% of Aussies rated life insurance as important or very important. For those with a mortgage, this increased to 86%.

However, just 63% of those with a mortgage held some type of life insurance, and this rate fell to 41% when the person surveyed was renting.

Insurance take-up was also found to be more prevalent among higher income earners. TAL reported that less than a third of those earning an income below $40k had some form of cover, compared to 53% of middle-income earners ($40k-$90k) and 63% of higher income earners (over $90k).

Survey participants with insurance were most likely to hold life cover (43% nationally), followed by income protection (24%) and disability cover (43%). Just one in five had trauma cover.

Outgoing TAL Group CEO, Jim Minto, said: “The results show that most people rate financial protection as an important or very important thing to have yet only around of half of the population say they actually have some form of protection in place.

“On the one hand it is encouraging people recognise the vital role of life insurance, but the relatively low protection levels reflect just how much work is to be done educating the community about the need to protect themselves and their families.”

Mr Minto said this education needed to extend to the different types of cover and highlight to consumers why each type of cover is important.

“And having appropriate protection shouldn’t stop once the mortgage is paid. Having protection such as critical illness insurance, which can finance special treatments, pay everyday bills and for costly rehabilitation and modifications such as wheelchair access, remains relevant long after the home is paid off,” he said.



2 COMMENTS

  1. Well Mr Minto part of the problem is affordability to the consumer.

    Under your present contracts and the subject of current debate, if an adviser takes 100.0% commission, the client is charged the normal premium.

    If with your company an adviser decides to accept Nil commission and charge a fee, the client receives a 30.0% discount and is charged 70.0% of the normal premium. Assuming the fee is greater than 30.0% of the original premium, the client will pay initially more than they might have if the adviser had accepted 100.0% commission.

    If an adviser elects to take 50.0% initial and ongoing commission, the client receives a 15.0% initial and ongoing discount.
    It hardly seems fair to the client or the adviser that if he is willing to give up 50.0% of his/her commission, the client’s discount is so poor.

    Perhaps the problem lies in the fact that your company is willing to give an adviser100.0% of the first years premium as commission but very little back to the client when an adviser is willing to fore-go a substantial amount up front and ongoing in the client’s interest.

    If the adviser is willing to sacrifice commission to assist a client and the affordability of premiums, then perhaps everyone in this process would benefit if your client discounts were more reasonable.
    It requires you and other insurers to be fairer in the process.

  2. Interesting article. Have to disagree with Alleycat I don’t believe cost is the problem. The comments relating to discounts are a separate issue and are not really related to this topic as most advisers do not discount fees, so it could hardly be a factor in the survey responses…

    I believe the issue is public apathy and a lack of connection with the topic – their choices to get covered are to:
    *go direct where there is no relationship with the intermediary and all the momentum to get cover comes from the life insured or
    *get advice on amounts of cover and suitable products – a process which is time consuming and expensive to deliver, not to mention ‘way too complicated’ for the average person…

    We need to improve these numbers, I think it will only happen through better connections and simpler advice processes where the need is scoped to ‘risk’. Lets hope the current review into the future of life insurance in Australia will assist us to provide sustainable solutions within sustainable businesses for a long time to come… have you all lodged your submissions???

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