The median level of disability cover held by Australians represents just 15% of a family\u2019s needs, a study into underinsurance has revealed.<\/p>\n
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Rice Warner\u2019s latest ‘Underinsurance in Australia’ report found that the median level of TPD cover in Australia is 14% of that needed to fully maintain the standard of living of the family. Similarly, the median level of income protection cover is just 16% of actual needs.<\/p>\n
These figures are significantly lower than the level of life insurance cover held by the working age population:<\/p>\n
Co-author of the report, Thierry Bareau<\/strong>, told riskinfo there were a number of possible reasons behind the lack of take-up of disability cover:<\/p>\n \u201cTo start with, life insurance is often easier to take out. Income protection often requires more underwriting, and some people may be deterred by the medicals,\u201d Mr Bareau said.<\/p>\n \u201cLife cover is also offered as part of nearly every super fund which means people are receiving a level of cover automatically, without having to take any direct action. And while many super funds now also include TPD cover as a default offer, the levels are not always sufficient.<\/p>\n \u201cAnother factor is the increased activity in the direct market, which is largely focused on death only covers.\u201d<\/p>\n According to Rice Warner\u2019s Richard Weatherhead<\/strong>, the figures demonstrate that the life insurance industry needs to focus on a deeper understanding of individual clients\u2019 insurance needs, so that insurance offers can be targeted at those with the greatest need, rather than on raising levels of cover across the board.<\/p>\n \u201cThis is particularly the case in relation to disability covers, notwithstanding the government\u2019s new Disability Care Scheme (DCS). The DCS complements, rather than replaces, the need for life insurance cover,\u201d he said.<\/p>\n… the life insurance industry needs to focus on a deeper understanding of individual clients\u2019 insurance needs<\/h6>\n