Insurers and advisers still have some way to go to educate the public on the value of their services, according to new research from the Association of Financial Advisers (AFA).
The research, entitled ‘Risking Everything’, revealed that consumers still rank life insurance as the least important type of insurance to hold, behind home and contents, car and medical.
The research also found that while those with a financial adviser were more likely to hold life insurance than their un-advised counterparts, only 25.8% of those rated life insurance as extremely important.
In delivering the results of the research last week, AFA CEO, Richard Klipin, said the industry needed to do more to get the Australian community thinking about risk, and how to translate that into appropriate levels of cover.
“Australia is known as the lucky country. So there is this ‘she’ll be right’ attitude. And that plays out consistently in the research,” he said.
… the biggest barrier to the take-up of life insurance was that people felt it was unnecessary
The survey found that the biggest barrier to the take-up of life insurance was that people felt it was unnecessary (48.5%). Other reasons cited by those without life insurance were that they would rather save the money for a rainy day (26.2%), and that they don’t see insurance as being good value (23.8%).
The AFA said that the research also highlighted the advice gap:
- Of those who had life insurance, only 16.4% had purchased it through an adviser. 28.5% bought their cover directly through the life company. The remainder said their insurance was purchased within superannuation (41.3%) or from a broker, ie: a one-off transaction with no on-going advice (11.4%).
- 90% of people with an adviser said they felt confident that they had sufficient levels of cover, compared with 71% of those without an advice relationship.
Mr Klipin said the results showed that those who had an adviser were better off because they felt more in control of their future.
“The insight from this data is that when you have advice, and you’re dealing with your insurances, you have more appropriate levels of cover; you know what you’ve got and you’re a whole lot more comfortable about your future,” he explained.
The AFA says the results suggest a fresh approach is required, to ensure that those who seek to insure their lives are doing so under the guidance of someone who can ensure that their type and level of cover is appropriate – a financial planner.
