Underinsurance high in life ranks
Most people in their mid-30s still have inadequate life insurance cover, despite a surge in sales and with affordability at an all-time high.
New figures released by the Investment and Financial Services Association (IFSA) show just 4% of people in their mid-30s with a dependent child have enough life insurance cover, benchmarked at 10 times their annual salary.
IFSA commissioned TNS Consulting and Rice Warner Actuaries in 2005 to investigate the level of underinsurance, and the latest findings suggest that despite efforts to convince Australian families of the value of life insurance, many are failing to heed the message.
“The IFSA campaign has effectively highlighted the extent of the underinsurance problem in Australia,” IFSA CEO Richard Gilbert said. “And in response, the industry has been working hard on delivering a range of new and better life and wealth-protection products, and more effective methods of distribution.”
Mr Gilbert says life insurance is increasingly affordable, with cover for a 39-year-old non-smoking woman costing about $570 a year, a $150 drop since the last IFSA survey in August 2005.
“Australian life insurance offices paid out around $10 million every single day in 2006. When you consider that around 4400 Australians with dependent children die each year and that $750,000 of life insurance cover can be purchased for around $1.40 per day, family protection and peace of mind is far more affordable than many people realise.”
Mr Gilbert says research company Plan for Life has released figures showing a 16% surge in sales last year, and Australian Prudential Regulation Authority (APRA) statistics show a 12.6% rise in life office premiums over the same period.
“With increasing levels of mortgage, credit card and other debt, I think people are getting the message that while debt can be a powerful tool when it is used to build wealth, protecting wealth is equally important.”
New figures released by the Investment and Financial Services Association (IFSA) show just 4% of people in their mid-30s with a dependent child have enough life insurance cover, benchmarked at 10 times their annual salary.
IFSA commissioned TNS Consulting and Rice Warner Actuaries in 2005 to investigate the level of underinsurance, and the latest findings suggest that despite efforts to convince Australian families of the value of life insurance, many are failing to heed the message.
“The IFSA campaign has effectively highlighted the extent of the underinsurance problem in Australia,” IFSA CEO Richard Gilbert said. “And in response, the industry has been working hard on delivering a range of new and better life and wealth-protection products, and more effective methods of distribution.”
Mr Gilbert says life insurance is increasingly affordable, with cover for a 39-year-old non-smoking woman costing about $570 a year, a $150 drop since the last IFSA survey in August 2005.
“Australian life insurance offices paid out around $10 million every single day in 2006. When you consider that around 4400 Australians with dependent children die each year and that $750,000 of life insurance cover can be purchased for around $1.40 per day, family protection and peace of mind is far more affordable than many people realise.”
Mr Gilbert says research company Plan for Life has released figures showing a 16% surge in sales last year, and Australian Prudential Regulation Authority (APRA) statistics show a 12.6% rise in life office premiums over the same period.
“With increasing levels of mortgage, credit card and other debt, I think people are getting the message that while debt can be a powerful tool when it is used to build wealth, protecting wealth is equally important.”