Higher-earning households are dropping life insurance, while those with incomes below $40,000 a year are maintaining cover, according to the TAL Financial Protection Index.

Households bringing in more than $90,000 a year score 40 on the index this year, down from 42 last year.

The index examines perceptions of insurance held and cover’s adequacy.

On a scale of 0-100, the higher figure indicates households have each of the four forms of life insurance and adequate coverage.

Households earning $40,000-$90,000 a year dropped to 27 from 29. The biggest drop was in families with only one income-earner, to 33 from 37.

Single-person and equal-earner households both improved to 32 from 31.

TAL Group CEO Jim Minto says these households probably have concerns about the economy and impact of losing their jobs.

“With single-person households on the rise, we may well continue to see an upward trend in this group recognising the value they see in life insurance to protect them.

“They may perhaps be increasingly aware that they only have themselves to rely on, and losing their job or experiencing injury will have a huge impact on rent, mortgage repayments and other commitments.”

The index suggests Generation Y consumers are taking out more life insurance, but Generation X take-up has declined.

The Generation Y index has moved to 26.4 this year from 24.5 last year, while Generation X has dropped to 36.4 from 39.7.

In the 18-24 age group the index has risen to 22 from 19.5, while the 25-34 group has moved to 29 from 27.4.

Mr Minto says uncertainty in the workplace may be encouraging take-up among younger people.

“It may be that, in a more risk-sensitive climate, they are looking to various life insurance options that can support them across various personal risk situations, so they can continue paying their debts and plans and dreams for the future.

“Increased uptake of life protection among younger generations is heartening.”