lack of awareness has blinded many people to the financial risks of injury, illness and premature death
(PRWEB) March 31, 2010
Widespread and profound naivety is contributing to a massive underinsurance problem across Australia, according to new research into life and income protection insurance by lifebroker, launched today.
Lifebroker CEO, Chris Eade, said the study of 1000 Australians by Sweeney Research showed a profound lack of awareness and understanding of both the financial risks posed by illnesses, injury and premature death, and the insurance policies that protect people from these risks, were the major causes of underinsurance.
Examples of naivety identified by the research included:
- 71 per cent of Australians mistakenly believe the federal government is required by law to provide financial support to families in the event of the premature death of a family member.
- 70 per cent mistakenly believe the federal government is required by law to pay a replacement income to workers if they stop work due to illness or injury not caused at work.
- 82 per cent mistakenly believe Income protection insurance pays a replacement income if they lose or quit their job.
- 77 per cent mistakenly believe everyone automatically has life insurance through their superannuation.
- 85 per cent mistakenly believe life insurance pays you a lump sum payout if you live past retirement age.
- 67 per cent said they believe insurance companies use loopholes to avoid payouts.
The research showed men and women vastly overestimated the cost of life insurance by 49 per cent and 65 per cent respectively, even though premiums for life insurance can be lower than car, home and health insurance. Thirty six per cent directly cited the perceived cost as the major factor in their not having it.
The research revealed a lack of awareness has blinded many people to the financial risks of injury, illness and premature death. Australians stated they were similarly worried by the financial costs of a home burglary or crashing their car, as they were with the financial costs to their family of their premature death or having a medical condition that stopped them working for more than three months.
The Lifebroker life insurance research report 2010 confirmed findings of previous underinsurance reports that show Australians are dangerously underinsured when it comes to life and income insurance, in contrast to rates of car, home and health insurance.
- 21 per cent of Australians have income protection insurance and 49 per cent have life insurance.
- Approximately half the life and income protection insurance policies are held within super where policyholders often accept the default level that in the case of life insurance can be as low as $7000.
- Conversely, 56 per cent of Australians had private health insurance, 80 per cent had some form of home insurance and 86 per cent had some type of car insurance.
“If you look at Australians’ attitudes to insurance in general you see they are quite prepared to buy insurance when they realise a risk exists that is worth protecting,” said Mr Eade.
“When asked only 8 per cent of Australians strongly agreed with the proposition that they were knowingly prepared to take the risk of not having insurance.”
Mr Eade said the research shows the insurance industry has an obligation to raise awareness of the risks of underinsurance, the products available to protect people, the affordability of life and income protection insurance, and that insurers do pay claims when misfortune strikes.
“As a result of these findings lifebroker is developing a new educational tool that will allow us to increase awareness and understanding of insurance and help reduce a problem that is causing so many people additional grief when accidents occur.”
The Lifebroker life insurance research report 2010 was an online survey of 1000 Australians conducted by Sweeney Research and covered all Australian states and territories.
Lifebroker is Australia’s largest specialist broker of life insurance, providing free premium comparisons across all major life insurers.
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