More than two thirds of working Australians have some form of life insurance however only around one third are aware they have this cover according to new research covering the financial fitness and capabilities of working Australians.
The research, released by Map My Plan and conducted by Newgate Research of around 1600 working Australians, found around a quarter of the survey respondents were ‘financially unfit’ – that is, they were unable to meet regular payments, carry lifestyle debt and have limited or no insurance, as well as no financial plan.
Map My Plan, chief executive, Paul Feeney said the measure of financial fitness was based on how much control people had over their personal finances, their ability to absorb financial shock, the amount of planning that has been done for the future and how free they are to act in regards to their finances.
He said the “average fitness” score was 114 out of a possible 200 but that 28% of respondents scored below 95 to 100, which rated them as ‘financially unfit’.
“Our research found that over 62% of working Australians do not have sufficient emergency savings… only 13% of Australians have a comprehensive financial plan, and a massive 34% have no plan at all”
“Our research found that over 62% of working Australians do not have sufficient emergency savings, and one in ten would go immediately into debt if they lost their job. When it came to alleviating financial stress, we found that having a financial plan was crucial. Despite this, only 13% of Australians have a comprehensive financial plan, and a massive 34% have no plan at all,” Feeney said.
“The majority of people surveyed said they did not consult a financial planner due to cost (75%) followed by the belief that financial planners are predominately focused on selling financial products, rather than developing a plan to meet their specific needs (71%).”
Feeney also said while working Australians had engaged with insurance it was typically for their possessions, such as car, house, contents and health, instead of life or income protection cover with health insurance being the most widespread due to government policy and incentives in this area.
According to the survey one third of respondents had life insurance, and around a quarter have disability, accident or trauma insurance, and income protection insurance.
Feeney said this is at odds with the current default offering of life insurance within many superannuation funds and a range of surveys which suggest that 70% to 80% of families have some form of death or life insurance cover.
“Our survey results indicate around one in three working Australians have life cover, which suggests there are many who are not aware that they may have this insurance in place,” Feeney said.
And here we are about to reduce IFA advisers by 50%. Makes sense
Oh, that’s right, the banks plan to step in with robo advice, GENERAL ADVICE and TV Direct style products designed not to pay claims, all under ASICs watch.. Fixed that. What the hell does the Treasurer think will happen to the CentreLink budget ?
This survey seems to spell out what we have been saying, which is that the majority
(75% in the survey) of people do not consult a planner due to fee perceptions and many are unaware and uninterested that they even have Life Insurance coverage.
We have a client with 3 directors who were not prepared to pay a fee of more than a few hundred dollars to get Life Insurance advice, though have been paying over
$100,000 p.a. for years for their Life policies we established, that the Life Company would never have received, if not for our expertise.
To all the guru’s out there stating clients are happy to pay a fee, this client took many months, substantial amounts of meetings, phone calls, emails, collation of data, analysis, preparation and follow through from start to finish, that if charged out at our hourly rate, would have meant a bill from us of around $60,000 plus GST.
No client will pay that amount for our advice and expertise, though they were happy to have us paid direct from the Life Company and the Life Company has been collecting substantially more than 100k p.a. for years, so they should also be happy.
If by a miracle, the client had agreed to pay a fee to cover our Business expenses of
$60,000 and we took nil commission, the resulting outgoings for our client would have been $30,000 more than our past and present system that pays commission.
However that is irrelevant as these directors categorically stated they would only pay fees of hundreds, not tens of thousands of dollars for Life Insurance Advice.
It does not matter what the guru’s say or what we say for that matter.
Clients determine how much they will pay for Life Insurance advice and administrative
costs incurred by us, are of no concern to clients.
Let us hope that the light may start to shine in Canberra and the real truth can be seen, as it appears the self-interest lobby groups are gaining the ear of the
Government, with the end result that all Australians will pay later.
Could not agree more with Jeremy below. 75% do not consult a planner due to the fees and the other 25% who do would be paying those fees for other Financial planning reasons of which risk insurance would then form a part of the recommendations.
Customers will simply not pay fees just for risk advice which is vital to them.
Risk advisers will be driven out of business and things will be worse for customers who will have no choice but to buy junk direct insurance.
Great win for the customer. Well done to the FSC and O’Dwyer for ignoring the obvious to increase insurance company profits.
Well they could at least make advice tax deductible and do away with stamp duty to increase affordability…. I also see there is no mention about reducing cumbersome compliance either – people do not want 30 page reports stating “take out $x amount of life insurance.” Make them simpler!! You might find people actually understand them better and you get less complaints (if there are many that is).
Spot on Jeremy…It’s OK though the so called consumer groups think that you’re a waste of time and you earn way too much. If they had of just gone to the “make the switch” campaign…sorry that was for home loans and premature of me…everyone wins..except the client and you of course!!! No advice product flog is the only way to go now. I’ll be damned if I let them beat me though. Maybe we set up a claims handling facility…no win ne fee..fill out claims forms and take 50%+ of proceeds. I wouldn’t do it, but is a joke of a system
Why do policies sold under General Advice and Direct policies pay commissions to sales people? They dont have to do the compliance or underwriting and most importantly they DONT HAVE TO ACT IN THE BEST INTERESTS OF CLIENTS. I just cannot understand how they get paid the same commission as policies recommended by advisers which are set up to help clients in their time of need. These direct policies rarely pay the benefit. If the powers that be actually wanted to increase the level of trust in the insurance industry they would either ban un advised policies, ban the commission on them or make the direct policy sales people act in the best interests of clients.
I just cannot understand how the direct insurers are getting away with acting in the worst interests of everyone.
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