Life insurance advisers need to concentrate on the underinsurance problem and not get bogged down worrying about the Future of Financial Advice (FOFA) reforms, says CommInsure GM Retail Advice Tim Browne.

“The key issue for our industry is underinsurance, and after FOFA it is back to the status quo,” he told an adviser briefing in Melbourne last week.

“We won the commissions battle but we haven’t taken the underinsurance problem forward.”

Mr Browne says advisers must confront the arguments clients use to avoid taking up life insurance.

“I estimate that if you have a cup of coffee a day, it will cost $90 a month,” he said. “Insurance for a younger person with no illness history is $29 a month. Advisers have to be on the front foot and tell clients about these figures.”

Mr Browne says life insurance is cheaper now than it was 15 years ago when the same policy would have cost $70 a month.

“We need to dispute some of these myths with the clients and show them the loss of the breadwinner in the family makes life very expensive for the remaining spouse,” he said.

“Is it worth selling the house, taking the kids out of school and having the funeral costs to deal with because there is no insurance? Clients insure their cars and houses, and advisers now have to tell them to insure themselves.”

Mr Browne says the myth about client fitness can be countered with figures such as one in three males and one in four females will be diagnosed with a cancer.

Also 200,000 children fall critically ill every year and two out of five Australians will suffer a critical illness before they reach 65.

He says the average cost of cancer treatment is $47,000 and “and during a lifetime, a stroke can cost up to $44,428”.

“Tell your clients the facts and covering these events is not expensive,” Mr Browne said.

“Tell them about stories of people you have helped to recover from an illness and how insurance paid all of those costs.”

Mr Browne says the life insurance industry paid $3.5 billion of claims in 2010 which works out as an average of $14.3 million paid to 245 Australians every working day.