Super-Based Cover Grows While Stand-Alone Falls
When the Financial Services Council surveyed Australians in 2006, 27% of the population had life insurance policies through superannuation. Macquarie Adviser Services conducted a similar survey this year and, according to Macquarie, the proportion of people holding super-based life policies has increased to 48%.
As a corollary to that increase, the number of people holding stand-alone policies outside super has fallen significantly, from 28% in 2006 to 18% today, although 30% of people with financial advisers have purchased stand-alone coverage.
Given those results, the Macquarie survey asked its 1000 participants about the adequacy of their life cover and whether it met the needs of policyholders. When the question was directed at people who held policies only through super, with no stand-alone coverage, 72% of respondents saw themselves as “very well” or “reasonably well” covered, and few of those offering that opinion felt that their super-only cover was insufficient for their needs.
When divided by gender, 42% of male respondents and half of female respondents indicated that coverage provided through superannuation was sufficient for their needs.
Macquarie CEO Justin Delaney questioned whether consumers really understood the level of cover provided by super and whether that insurance met policyholders’ real needs.
According to Delaney, there are obstacles to a thorough evaluation of life insurance for many people, including a reluctance to invest the money, time and effort that are necessary for a review of cover with financial advisers. The fact that the involvement of an adviser increases the proportion of people with stand-alone cover to 30% was seen by Delaney as "proof of the positive work the advice industry is doing to ensure its clients are adequately covered."
Cost is becoming an increasing influence on decisions, although survey respondents in the past have tended to emphasise other reasons for eschewing stand-alone insurance. Along with cost, respondents said that increased cover was simply not something they had considered. Of those with no life insurance, 62% were unsure about obtaining cover, unlikely to obtain it or simply unwilling to obtain it. In that same group, 45% thought life cover was less important than health insurance and only 17% acknowledged that life insurance was of any benefit. A quarter of survey respondents expressed the belief that life cover was irrelevant for those with substantial assets.