Tough times are not only driving Australians to buy more life insurance but also triggering them to let policies lapse, in a paradoxical situation uncovered by ING research.

It says robust life risk sales and in-force business retention helped it lift premium income 16% in Australia and NZ in the second quarter this year, on the back of a strong first quarter.

But an independent survey ING commissioned revealed an underlying problem, with more than 65% of respondents seeing affordability as a key reason for cancelling a life insurance policy.

Gerard Kerr, Head of Products, Marketing and Reinsurance for ING Australia’s Life Risk division, says the survey sought to understand the motivation of about 300 people whose policies had lapsed.

Apart from tight finances, other reasons included advisers finding alternative cover and the failure to realise policies had lapsed.

“People are still aware of the need to protect but we have the twin challenge of them not having as much money to spend,” Mr Kerr told insuranceNEWS.com.au. “They seem like opposites but they are surprisingly close to each other.”

He says some respondents were not aware of their options when considering letting their policies lapse due to economic stress, and the survey found they would have been open to discussing this with an ING representative.