As Australians face rising cost of living pressures, new independent research shows financial advice on life insurance remains too inaccessible and expensive for many with just 6 per cent of Australians receiving it.
The research, conducted by 89 Degrees East and commissioned by the Council of Australian Life Insurers (CALI), shows the number of people who actually receive professional advice remains low even though a third of Australians have shown an interest in getting advice in the past three months alone.
Alarmingly, the research also shows that more than a third (34%) of people lean on their loved ones to tell them what to do about their life insurance cover rather than speaking to their life insurer or getting advice through their superannuation fund.
“This shows a serious gap in the quality of advice Australians are getting about their life insurance,” said CALI CEO Christine Cupitt.
“We believe people are turning to their family and friends because the options for getting professional advice are too limited and too expensive.”
Researchers found that two-thirds of Australians (66%) say they’re concerned that cost of living pressures will impact their ability to afford to take out or continue paying for life insurance.
Parents with dependent children living at home and those aged 45 to 54 years old are most likely to be concerned about the impact of cost of living pressures on their life insurance cover.
When reviewing their cover, people are just as likely to go online and use search engines and digital calculators as they are to contact their life insurer directly. Just 38 per cent would speak to a financial adviser.
Only eight per cent of people would turn to social media, but that figure is much higher for younger Australians. Almost 20 per cent of those aged 18 to 24 years would determine their life insurance needs by using social media.
“It’s critical that Australians have better access to affordable professional advice when they need it most, so they can make informed decisions about how to protect their future,” Ms Cupitt said.
“Australians shouldn’t have to pay $3,500 on average for financial advice, especially when life insurers stand ready to provide limited advice about their products which can give people added peace of mind.”
The same research shows that more than 90 per cent of Australians are satisfied with the service they receive from their life insurers directly.
As the leading voice of life insurers in Australia, CALI has been advocating for life insurers to be able to provide direct limited advice to people who ask for it. This follows the Federal Government’s proposal earlier this year to make it easier for superannuation trustees to give advice to Australians on their retirement needs.
“There is a clear unmet financial advice need in Australia and a growing underinsurance problem that is leaving people unprotected when times get tough,” she said.
“Almost one in two Australians say the main driver for obtaining life insurance is for the financial protection and sense of security it provides loved ones, and we must ensure they’re getting the right advice to make that a reality.”
The Federal Government is preparing to announce the next stage of its Delivering Better Financial Outcomes package before the end of the year. CALI is calling for an expansion of the type of advice life insurers are allowed to provide their customers to help deliver the protection and certainty people need on their best and worst days.
“Of course, this should only happen with appropriate limitations and strong consumer protections to ensure better outcomes for Australian workers and their families.
“Life insurers take their legal obligations very seriously to act in good faith and prioritise the interests of the people they serve.”