Increasing economic pressures will widen the insurance coverage gap among vulnerable Australians unless action is taken, according to a new industry report from MetLife Australia.
The Value of Life Insurance report asserts young women and those receiving disability payments are highly vulnerable to financial instability and may be most at risk from a lack of appropriate insurance coverage.
A statement from MetLife says that legislative changes to end default insurance cover for younger super fund members and those with lower balances or inactive accounts “…may have unintentionally disadvantaged young women and people living with a disability who are statistically more likely to fall into these categories.”
The insurer says that adding to the problem is less than half (48%) of women in Australia understand at least three of five basic financial literacy concepts, meaning it further exacerbates financial vulnerability and understanding the need for protection.
It notes the report highlights the importance of engaging super fund members through awareness and education, the need for flexible product design to meet their needs, how early intervention contributes to better outcomes, the role of advice and how technology can be leveraged for better member experiences.
Wendy Tse, Chief of Staff, Strategy and External Affairs, MetLife Australia, says the industry is reaching an important juncture, noting that increasing household financial pressures and cost of advice “…will likely see many Australians risk life without insurance, exacerbating Australia’s under-insurance problem. The lack of financial literacy is a contributor to this, as people fail to see the value of life insurance.”
“We’ve shown that financial wellness and general wellbeing are inextricably linked. Action is needed to ensure Australians, especially the vulnerable, are able to weather the future economic pressures and make informed decisions on the protection of their lives.”
She states that insurance is about preserving a way of life, not only a means to protecting against an adverse event.
Tse says that’s why MetLife is finding ways to drive engagement with life insurance in super through initiatives such as the UNSW Sandbox program. This focused on “…finding innovative solutions to engage people across different generations, as well as reinforcing positive actions towards a life well lived with 360Health.”
She says these initiatives seek to support its partners and customers to improve financial literacy, while using technology to deliver new solutions.
…the report rallies the financial services industry to improve Australia’s under-insurance gap and progress financial wellness…
MetLife’s report rallies the financial services industry to improve Australia’s under-insurance gap and progress financial wellness via:
- Member engagement – making it faster and easier for members to interact with their insurance through digital solutions, and tailoring communications to the member while educating them on how they can take control of their insurance needs
- Product design – developing products that meet the needs of members and are able to flex with lifestyle changes over their lifetime. MetLife’s Smart Default seeks to adjust insurance coverage with member lifestyles and fund demographics in mind
- Early intervention – treating members early has a measurable impact on their return to health and the economy. Recent research shows increased access to early intervention will save $126 billion in social and other costs of unemployment
- Accessible advice – ensuring access to quality and affordable advice will positively impact millions of Australians. Members should have access to the required level of advice so they can build a more confident future
- Technology – providing digital solutions to meet the changing needs and expectations of customers and regulators. Digital services will transform the customer experience, through faster underwriting and claims processes, easier engagement and self-serve functionality
Click here for the full 2022 Value of Life Insurance report.
