Life cover is the first insurance policy consumers would drop if money became too tight, according to research by GfK Australia and the Financial Services Council (FSC).

Out of all expenditures, travel is the first thing people would cut.

Life insurance ranks eighth, followed by health cover. Home and car insurance are the last things consumers would drop.

Only 50% of respondents consider looking after their family financially a top priority, the study shows. A similar percentage prioritises ensuring an income stream in case they cannot work due to illness or disability.

GfK Research Director Consumer Experiences Alena Maher says Australians do consider life cover and income protection as important, but there is national apathy about taking out policies.

“We know underinsurance is a problem, but the challenge is how the [life] industry can encourage behavioural change,” she told the FSC life insurance conference last week.

“If life insurance is bought, it is not just about explaining how it works, it is about explaining the need.”

Only 38% of survey respondents have tried to plan for a job loss, while 35% have protected against stopping work due to disability and 35% have taken steps for the event of death.

“Consumers only think about health cover and little else,” Ms Maher said. “Most consumers said they didn’t know what products to get to cover these losses.”

Most survey respondents understand life insurance pays a lump sum if they die, but only one in four knows there are payments to cover illness and disability.

Barriers to life insurance include the cost (53% of respondents) and the perception it is a waste of money (35%).

About 20% think they have a low chance of needing to claim on a life policy.

“We still have to explain to people life insurance does pay claims,” she said. “But the trigger for people wanting to take out cover is when something happens, and then it is too late.”