Australians’ confidence that they can rely on the nation’s safety net when things go wrong is being eroded — not only by rising cost-of-living and mental health pressures, but by limited access to financial advice.
This is one of the central findings of the State of Australia’s Safety Net 2025 Report, released by the Council of Australian Life Insurers, which paints a picture of working Australians struggling to stay financially covered, mentally well and confident about their future security.
CALI Chief Executive Officer Christine Cupitt said the research shows how fragile Australia’s safety net has become across all stages of working life.
“Whether they’re starting out, raising a family, or approaching retirement, working Australians want the same thing: confidence that if something goes wrong, there is a system to fall back on,” Cupitt said, adding:
“Right now, rising mental ill-health, cost-of-living pressures, and limited access to advice are eroding that confidence.”
Advice Gap Widening as Costs Rise
According to the report, just 8% of working Australians received financial advice on life insurance in the past year, despite one in three wanting it.
This persistent advice gap means many people are making financial protection decisions without professional guidance. The research also found that half of working Australians now say they trust online sources for financial advice, underscoring the growing reliance on unregulated information channels.
Cupitt said the findings reinforce the importance of affordable, accessible financial advice: “If we strengthen the system now, it will be there to catch more Australians tomorrow,” she said.
CALI has renewed its call for the Federal Government to legislate the Delivering Better Financial Outcomes reforms, which it says would enable life insurers and a new class of advisers to offer limited advice on life insurance products.
The industry body also wants clear pathways to help pre-retirees access lifetime income streams to support a smoother and more confident transition into retirement.
Cost-of-Living and Coverage Pressures
CALI’s research reveals financial strain is widening the protection gap. Seven in ten working Australians say cost-of-living pressures are affecting their ability to maintain life insurance, while one in three are very concerned — particularly those aged 35 to 54 managing mortgages and family expenses.
The report highlights that this group is balancing multiple financial commitments at the same time they are least likely to receive advice, leaving them vulnerable to underinsurance or lapses in cover.
Mental Health: A Leading Cause of Disability Claims
The report also reveals that mental ill-health is now the leading cause of TPD claims in Australia. Data provided by CALI’s research partner SuperFriend shows burnout and psychological distress are widespread, affecting every generation in the workforce It reports:
- Gen Z and Gen Y workers report the highest levels of burnout, consistent with elevated psychological distress
- Gen X workers are more likely than others to report excessive workloads and to work more than 40 hours a week
Dr Natalie Flatt, Chief Mental Health Adviser at SuperFriend, said financial stress and mental health challenges are closely linked and require coordinated responses from both workplaces and policymakers.
“Across industries, we’re seeing that financial distress, burnout and psychological strain are strongly interconnected,” Dr Flatt said.
“When people are struggling at home, it shows up at work, and when workplaces don’t feel supportive, it makes recovery harder. A strong safety net starts with compassionate leadership and psychologically safe workplaces, where employees feel safe to share challenges and access the support they need to stay well.”
Coordinated Reform Needed
Cupitt said the report underscores the need for a coordinated national approach to strengthen both the financial and mental health elements of Australia’s safety net.
CALI is calling on government to:
- Legislate the Delivering Better Financial Outcomes reforms to close the advice gap
- Establish national mental health targets, fund early-access treatment and address workforce shortages
- Develop clear pathways to help pre-retirees purchase lifetime income products for a smoother retirement transition
“A strong, modern safety net relies on collaboration — across government, industry, and workplaces — to give Australians the confidence that support will be there when they need it most,” said Cupitt.
Fast Facts: State of Australia’s Safety Net 2025
CALI highlights these key findings contained in its report:
Cost of living and financial confidence
- 7 in 10 working Australians are worried cost-of-living pressures will affect their ability to maintain life insurance
- 1 in 3 are very concerned, especially those aged 35–54 juggling mortgages and family expenses
Advice gap and financial literacy
- Only 8% of working Australians received professional advice on life insurance in the past year, while one in three wanted it
- Half of working Australians now say they trust online sources for financial advice
Workplace wellbeing
- 46% of workers are at risk of burnout
- 42% have experienced a mental health condition in their lifetime
- 47% say their workplace contributed to or worsened their condition — rising to 60% among government employees
- 85% say it’s important that mental health is covered by life insurance
