As Australians face rising cost of living pressures, new independent research shows financial advice on life insurance remains too inaccessible and expensive for many with just 6% of Australians receiving it.
The research, commissioned by CALI, shows the number of people who actually receive professional advice remains low even though a third of Australians have shown an interest in getting advice in the past three months alone.
The council says in a statement that “…alarmingly, the research also shows that more than a third (34%) of people lean on their loved ones to tell them what to do about their life insurance cover rather than speaking to their life insurer or getting advice through their superannuation fund.”
CALI CEO Christine Cupitt states this “…shows a serious gap in the quality of advice Australians are getting about their life insurance.”
The council believes people are turning to their family and friends “…because the options for getting professional advice are too limited and too expensive.”
Cost of Living Pressures
The researchers also found that two-thirds of Australians (66%) say they’re concerned that cost of living pressures will impact their ability to afford to take out, or continue paying for, life insurance.
Parents with dependent children living at home and those aged 45 to 54 years old are most likely to be concerned about the impact of cost of living pressures on their life insurance cover.
The council says that when reviewing their cover “…people are just as likely to go online and use search engines and digital calculators as they are to contact their life insurer directly. Just 38% would speak to a financial adviser.”
Only 8% of people would turn to social media, but that figure is higher for younger Australians. CALI says almost 20% of those aged 18 to 24 years would determine their life insurance needs by using social media.
…Australians shouldn’t have to pay $3,500 on average for financial advice…
Cupitt notes it’s critical that Australians have better access to affordable professional advice “…so they can make informed decisions about how to protect their future.”
“Australians shouldn’t have to pay $3,500 on average for financial advice, especially when life insurers stand ready to provide limited advice about their products which can give people added peace of mind.”
The same research shows that more than 90% of Australians are satisfied with the service they receive from their life insurers directly.
…CALI has been advocating for life insurers to be able to provide direct limited advice to people who ask for it…
CALI adds it has “…been advocating for life insurers to be able to provide direct limited advice to people who ask for it.”
It says this follows the Federal Government’s proposal earlier this year to make it easier for superannuation trustees to give advice to Australians on their retirement needs.
“There is a clear unmet financial advice need in Australia and a growing under-insurance problem that is leaving people unprotected when times get tough,” Cupitt says.
“Almost one in two Australians say the main driver for obtaining life insurance is for the financial protection and sense of security it provides loved ones, and we must ensure they’re getting the right advice to make that a reality.”
The Federal Government is preparing to announce the next stage of its Delivering Better Financial Outcomes package before the end of the year and CALI is calling for “…an expansion of the type of advice life insurers are allowed to provide their customers to help deliver the protection and certainty people need…”
Cupitt notes “..this should only happen with appropriate limitations and strong consumer protections to ensure better outcomes for Australian workers and their families.”
The research was conducted by 89 Degrees East.
