Two new studies have revealed Australia’s underinsurance problems are being addressed with wealth protection product sales surging.
The separate pieces of research, undertaken by the Australian Prudential Regulation Authority and Plan For Life, showed respectively that in the 12 months to December 2006 total life office premiums increased by 12.6 per cent, with overall new premium sales up by nearly 16 per cent.
This is an improvement on the negative results drawn from a major study commissioned by the Investment and Financial Services Association (IFSA) in 2005 into the scale of underinsurance in Australia.
The analysis, undertaken by TNS and Rice Warner Actuaries, found that only 4 per cent of full-time workers in their mid-30s with dependants had a satisfactory level of life insurance cover.
IFSA began a campaign in August 2005 to encourage the uptake of life insurance by Australian families.
The association’s chief executive, Richard Gilbert, said the campaign effectively highlighted the extent of the underinsurance problem in Australia and, in response, the industry had been working hard on delivering a range of new and better life and wealth protection products and more effective methods of distribution, as reflected in the new research findings.
“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,” he said.
“A bout of ill-health or the death of a primary income earner or homemaker who may work part-time can quickly lead to extreme financial hardship.
“Life and wealth protection products are affordable and the increased popularity and uptake of products such as homemaker cover, combined with more flexible policies, better underwriting processes and greater ease in applying for cover are all factors in this trend.”
