Financial advice changes are critical for Australian workers struggling with cost of living increases and mental health challenges, according to a new report which lends weight to calls for more ways for Australians to access financial advice, including life companies delivering simple advice.
The inaugural State of Australia’s Safety Net report, commissioned by the Council of Australian Life Insurers, looks into the lives of more than 5,000 Australian workers and shows the financial advice needs of young people (18-34 years), women and those in their mid-career (35-54 years) are not being met.
The research investigates the link between life insurance and the personal and financial wellbeing of Australian workers.
CALI CEO Christine Cupitt says the report shows that rising cost of living, increasing mental health challenges and global economic shocks are putting intense pressure on Australians.
“They need someone to talk to about their financial future now more than ever.”
More than two-thirds of Australian workers are concerned that cost of living pressures will impact their ability to afford life insurance in the future.
The report lends weight to CALI’s earlier call that life insurers should be able to provide limited advice.
The council notes the report highlights “…the critical need for the passage of tranche two of the Federal Government’s Delivering Better Financial Outcomes legislation, which would allow life insurers to provide simple advice on their own products when customers ask them to.” (Also see: CALI Reinforces Complementary Risk Advice Agenda).
…people are increasingly worried about falling through the cracks. Life insurers have a critical role to play to ensure that doesn’t happen…
Cupitt says Australia’s safety nets are stretched too thin “…and people are increasingly worried about falling through the cracks. Life insurers have a critical role to play to ensure that doesn’t happen.”
The research was conducted independently by agency 89 Degrees East and led by social researcher, Dr Rebecca Huntley.
She says the findings show that most Australians, regardless of their age, aspire to be more financially resilient, and this is only becoming more important for them in a cost of living crisis.
“Higher living costs and the uncertain economic environment have led to increased stress levels and concern about mental health in our community. People know that mental health challenges can have a lasting impact on their personal finances due to time off work and the cost of accessing treatment and support.”
CALI notes that life insurers are the largest provider of financial support for people experiencing mental health concerns, second only to the Federal Government.
“Almost 90% of Australians think it’s important that they’re able to access financial support through their life insurer in the event of mental health challenges that mean they’re unable to work. Despite this, only a third would turn to their life insurer for help in this situation.”
Most workers are more likely to ask family and friends for help or seek government assistance payments instead.
…This report highlights that Australia’s life insurers provide a fundamental safety net…
“This report highlights that Australia’s life insurers provide a fundamental safety net and pathway for people to secure their future, no matter what happens throughout their lifetime,” says Cupitt.
CALI says that last year, more than 91,000 Australians or their loved ones received more than $12 billion in financial support from life insurers. “Even so, there remains a growing under-insurance problem that is leaving more than three million people with inadequate protection when times get tough.”
“We have an advice accessibility crisis in this country. In the past three months alone, almost a third of Australians considered seeking financial advice on life insurance, but just 8% actually received it,” Cupitt notes.
Click here to read the full report.
12 Billion dollars paid to 91,000 Australians averages out at $131,868 which is a tidy sum of money if you still live at home with mum and dad, do not have a mortgage, personal loans, Higher Education debt, or ongoing expenses to worry about.
When you consider that many of those 91,000 people may no longer be able to earn their full incomes and are now uninsurable, then they have big problems.
The difference between an Advised person and someone who just gets some basic cover, is the advised person will usually have appropriate cover and $131,868 fails that test, 100% of the time.
The insane logic of the Government saying select entities can have "qualified" Advisers though no fee income or commission can be derived from the transaction, is probably the most stupid thing I have ever heard and over the last 37 years I have been in this Industry, I have seen and heard many doozies.
There has been NIL new Risk Advisers who have come through the University pathway as far as we know, as all the newly qualified Advisers have gone down the Financial Planning / Investment advice route.
The Government has seen the result of their "improvements" with thousands of Advisers who wrote risk, exiting the Industry or giving up on risk advice, New Business plummeting and premiums more than doubling and the best they can come up with is the no income Adviser?
The solution has always been to allow people to come into the Life Insurance Industry under a specialist risk only licensed Adviser model that encourages people back into, not chase them away from what was a great Industry, though now is suffocating under red tape.
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