Research by online life insurance broker Lifebroker has shown that ignorance, not indifference, is the key contributor to life and income protection underinsurance.

The report is based on a study of 1000 Australians and found that underinsurance is mainly caused by a lack of awareness of risks and a poor understanding of how life and income protection insurance operate.

With 71% of respondents believing that the Federal Government provides financial support to families following the premature death of a family member, it’s clear that misunderstanding of the risks and their impact is widespread.

“After we did the research we became aware that it really was a lack of understanding and awareness that was mostly the problem,” Lifebroker spokesman Matt Read told insuranceNEWS.com.au.

“We realised that when it comes to things where people know there is a risk, like when they own a car or a home, most people take out insurance. So it wasn’t that they weren’t prepared to get insurance, it was that they didn’t realise that they needed to.”

To address this, Lifebroker is funding and distributing a guide to life and income protection insurance in a bid to help consumers make an informed decision.

Mr Read says he supports moves by several super fund providers to boost levels of default life cover, some of which were as low as $7000.

“I think the most important thing is that people understand first and foremost the principle of insuring themselves and that they take on that responsibility.”