Life insurance an opportunity for planners

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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

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