There’s a $1370 billion gap between the level of life insurance cover held by Australian families and the level of cover required to shield against financial risk, according to the Investment and Financial Services Association (IFSA).

The research showed 5.4 million families are leaving themselves exposed to the risk of financial hardship if either parent dies.

IFSA CEO Richard Gilbert says the research highlights the massive underinsurance problem for many Australian families, which has been further exposed through the introduction of the Super Choice regime.

The research found 60% of people with dependent children don’t have cover to assist their family for more than one year if they were to die. Those with the greatest gap are parents under 30 with a mortgage, households with an income of less than $50,000, and single parent families.

Mr Gilbert says the research has given IFSA a clearer picture when it comes to issues affecting life insurance, and it will now work with the industry to “raise awareness of the benefits and value of life insurance among Australian families”.

“IFSA will be encouraging Australian families to see life insurance as a vital component of sound financial management and will be working towards increasing the accessibility of life insurance products to Australian families,” he said. “In response to the research, the industry will also be looking at the complexity in the products offered and in the jargon it uses.”