Life insurance an opportunity for planners

_{By Kathleen Payne | 5/02/2013 12:00:00 AM | 0 comments}

New index figures from TAL reveal that Australians do not believe they have enough financial security, which could be good news for financial planners.

The TAL Australian Financial Protection Index questioned more than 1200 Australians on how they view their life insurance, with a score from 0 to 100 – where 100 indicates they have adequate coverage in life, illness, disability and income protection insurance. The figures from the report were released yesterday.

The index showed the national score for Australia was 24.2. TAL managing director Jim Minto was surprised by the low score, given the increased take-up of life insurance through superannuation over recent years.

“While most Australians have some form of life insurance through super, some people are simply not aware of it, while many do not know if the types and level of life insurance cover they have are adequate,” he said.

Minto said the index showed three things:

The key message for advisers is that this is a measure of peoples’ perceptions.
People know they don’t have enough cover
It’s a great opportunity for advisers to help those customers to meet their needs.

Of the premiums currently being paid in Australia (more than $11 billion), 60% come from consumers with a financial adviser, says Minto. Of those using a financial adviser, about 70% say they have enough insurance.

“We know that when they go to an adviser they’re far more likely to believe they have enough,” says Minto. “If more people went to advisers, we would see an increase in the index.”

Shares in currently paid premiums are growing for direct consumers and those insured through superannuation, but it is a great opportunity for financial advisers to provide additional cover, says Minto. Even those with considerably more to lose recorded a low score, though slightly above average.

Key comparisons of the index:

Table 1: State comparisons

State	Financial Protection Index score
QLD	27.4
WA	24.6
VIC/TAS	23.9
SA	22.8
NSW/ACT	22.7
Annual household income
More than $90k	31.7
Between $40k and $90k	22.8
Less than $40k	16
Children living at home	25.3
Yes, under 18 years	27
No children at home	22.7
Yes, 18 years plus	21
Marital status
Married / de facto	28.1
Unmarried	17.7
Risk profile
Risk taker	34.7
Take some risk	26.9
Avoid risk	20.4
Ownership status
Own with a mortgage	32.2
Own freehold	27.2
Renter	14.1