Increased superannuation life insurance jeopardises coverage
A significant increase in the number of Australians holding life insurance coverage through their superannuation has corresponded with a drop in the number of people holding a stand-alone policy, potentially exacerbating the insurance gap, according to Macquarie Life.
Since similar research was conducted by the Financial Services Council in 2006, the number of Australians who say they have life insurance through superannuation has grown from 27 per cent to 48 per cent.
But over the same period the number of Australians who say they have a stand-alone life insurance policy outside of superannuation has dropped from 28 per cent to 18 per cent, according to a Macquarie Life survey of 1000 Australians.
Although having the cover through superannnuation can provide peace of mind, the understanding of the level of cover that life insurance through super provides, and its ability to meet a policyholder's, needs is a concern, according to Macquarie Life head Justin Delaney.
Half of women and 42 per cent of men with life insurance through superannuation thought it was adequate.
Of those with life insurance through super only, 72 per cent saw themselves as very or reasonably well covered, and an overwhelming majority of those said they believed their super cover was sufficient, according to Macquarie Life.
Clients are often not willing to put in the extra time, effort or money required to go over their insurance with their advisers, Delaney said.
Respondents who did not feel well covered said the main barriers were cost and because they simply don't think about it - suggesting what a client can afford to pay is becoming an increasingly influential factor, he said.
Respondents who had a financial adviser had a higher rate of stand-alone life insurance at 30 per cent, which was "proof of the positive work the advice industry is doing to ensure its clients are adequately covered," Delaney said.
The study also found that 62 per cent of those with no life insurance would not get it, were unlikely to get it or were unsure if they would get it.
Of those with no cover, only 17 per cent saw a benefit in obtaining it, 45 per cent thought private health cover was more important and 25 per cent believed people with substantial assets did not need life cover.
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