‘Misinsurance’ as Damaging as Underinsurance


The majority of Australians are misinformed when it comes to life insurance, and the consequences could be just as damaging as underinsurance, Zurich has warned.

Zurich’s Richard Dunkerley

According to research conducted by Zurich, the vast majority of people who hold insurance inside superannuation have never conducted an analysis of their own life insurance needs. 80% of those surveyed said that despite knowing they had cover inside their super, they had never actually reviewed how much they would need to meet their personal financial obligations.

Similarly, many are unclear about what is covered by their group life policy, with 11% believing it covered them for a traumatic illness, and 5% thinking dental and optical costs could be claimed.

Respondents also struggled with the concept of income protection. Less than one-quarter knew how much they were covered for, and only 15% were able to identify the waiting period that applied to their coverage.

Richard Dunkerley, Head of Marketing for Zurich’s Life and Investments business, said the research exposed a significant knowledge gap, again illustrating the important role for education and advice.

5% thought they could use their group life policy for dental and optical expenses

“Every individual is different. Insurance cover ideally would match the specific needs of each individual, so it is important that people understand whether or not their ‘default’ insurance option delivers appropriate outcomes matched to their precise needs in the event of a claim.

“The research findings are a timely reminder for consumers to become better acquainted with the detail of their policies, ideally by seeking qualified advice, to help avoid the downside consequences of the ‘misinsurance’ gap,” he said.

Mr Dunkerley added that there was a duty of care on all participants within the superannuation, advice and insurance sector to do more to educate consumers about their insurance needs. He cited another of the survey’s findings, which revealed that three in five of those polled would have to sell personal assets just one month after an illness or injury in order to survive financially.

“The results further indicate the need for a more comprehensive program of literacy regarding life insurance to raise the general level of education and understanding amongst Australians,” he said.



  1. Whilst greater financial literacy amongst consumers could be a good thing, it should be approached with caution. If it leaves consumers with the impression that they can do it themselves, it has the potential to exacerbate rather than fix the problem.

    Arriving at the most appropriate insurance solution for any individual is complex and involves many moving parts including an understanding of financial maths, multiple regulations, an ability to read and understand a complex contract as well as a professional detachment from the person being insured amongst other things.

  2. Well said Jamie, however who is Zurich ? is it an insurance company? it sells an agreed value income insurance policy to a client with financial evidence supplied, at underwriting accepts it as proposed, and at claim time insists on the insured supplying the past 5 years financial evidence to support a $4,000.00 a month claim. The 2 years prior and post application are not acceptable.

    Claims also insists on not only 5 years full financial evidence, but all associated entities including trusts and companies. Its not an indemnity policy.

    Claims also wants (even after full medical underwriting, 10 years history and after acceptance in 2004) all medial evidence, even if it is not the subject of claim, no wonder people think they have dental insurance within super when you buy insurance you never know what you are getting.

    After 10 years in force it would be impossible to claim fraud, also after underwriting and acceptance of the risk the only medical information you are entitled to is prior to acceptance and the claim at hand not what you feel you want.

    • Hi Matthew

      I have had nothing but positive experience with Zurich claims including with an agreed value (not endorsed) IP claim that will end up being paid to age 65.

      It’s a shame that your experience has not been the same.



  3. I see Matthews point, the fact is that underwriting is occurring at application and point of claim.
    My concern is that ease of getting business on the books ( when there is less or no financial pressure on the client) is is fine, but the client when in need of a benefit at claim time has a number of time consuming hurdles to overcome.
    This can lead to frustration and annoyance.
    If a client is medically and financially accepted , and the insurer accepts the premium for a benefit, the client logically expects that benefit to be paid.
    I get the issues around IP sums insured , and the need to create a back to work motivation, but a more streamlined claims process may need to be looked at, otherwise the rise in lawyers advertising that they should be the first port of call at claim time will only increase.

  4. The simple remedy to these financial debates is to discard all agreed value products. It’s chocking our industry to death (combined with mental illness claims). Most insurers report an alarming increase of self employed agreed policy holders who earn considerably less at claim stage than years earlier at application stage. This pumps up their pre-claim income rate way over the 75% cap, setting up a long term claim. Get rid of agreed value policies!

Comments are closed.