“Worrying” reliance on superannuation life insurance

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Nearly half of the participants in a recent survey believe that their superannuation fund will provide them with enough cover in the case of their sudden death.

The survey, commissioned by Budget Direct Life, revealed the “worrying” misconception in relation to superannuation.

A whopping 45% of the Australian’s surveyed said “yes” when asked if they believed their superannuation would provide enough cover if they were to die.

And while 43% of participants saw life insurance as a necessity, 35% think it’s just another product people are trying to sell them, according to the survey.

These results follow recent research by Zurich which also revealed the extent to which Australians have misperceptions about their life insurance.

Called Misinformed, Misinsured? this research polled 394 employed Australians in order to pinpoint what they believe they are covered for through their life insurance, and how this aligns with their own stated risk priorities.

At the time, the head of marketing for Zurich’s life and investments business Richard Dunkerley, told Wealth Professional that the results were highly concerning.

He said misperceptions about life insurance seem to stem from both the massive explosion in self-service insurance, as well as the automatic cover given to many people through their superannuation.

In some cases, this has lulled people into a sense of false security, he said.

“Super funds give a degree of cover that is not tailored to your circumstances, it’s more of a formula. People assume that the amount they’ve got is the right amount for them, but generally it isn’t because it’s not based on their personal circumstances.”

Dunkerley called for a duty of care within the superannuation, advice and insurance sector to do more to educate consumers.

Advisers are faced with a huge opportunity to educate and help Australian’s to cover themselves correctly, and with new technology evolving every day there are many innovative and inexpensive channels that can be used, he said.

“There’s no doubt that from an adviser’s perspective this demonstrates that the need for quality advice has never been greater. We need to look at the evolution of how people are communicating, interacting and learning.”

SEE MORE:

Australians exposed through life insurance misperceptions              

Risk advisers’ greatest trials

Intra-fund advice costs less than $3, but who uses it? 

  • Martin Le Tessier on 25/03/2014 6:17:26 PM

    I was discussing this exact issue with some of my referral partners this morning. The problem I also with very low amounts of cover is that the insurance is perceived as good value where more robust cover does mean meatier premiums, they are often better value.
    Have you reviewed the price of direct funeral insurance? Premium to benefits shows this cover is typically outrageously expensive

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