Cost remains the main reason for people not holding life insurance but several myths persist about life cover, potentially to the detriment of Australian households.
Online research conducted by Galaxy Research for the TAL Group found misconceptions such as “health insurance provides the same sort of cover as life insurance”, “the government will look after my family if I die” and “life insurance isn’t necessary for those without family” are still widely prevalent.
In the poll of more than 1200 people, 47 per cent living in households where the main breadwinner doesn’t hold life insurance claimed they could not afford to take out some form of personal cover.
TAL Group chief executive, Jim Minto, said the results are a major cause for concern as life insurance is not only affordable but provides vital support for a person’s main asset: their ability to earn an income.
“We know from our polling that some people will not let their insurance drop for their car or even their phone, but when people are not having life insurance due to home budget pressure or because of a lack of understanding, then we know the life industry has a responsibility to help educate people on the risks they face and benefits of life protection,” he said.
“The great irony is that times of reduced confidence in job and financial security are the times when people need life insurance protection the most. Life insurance is essential, not a luxury that people should let go of easily. Being unable to earn an income can have life-long and devastating consequences for Australians, their dependents and families.”
Single and health insured
One in five of those surveyed (18 per cent) claim they didn’t need life insurance because they have no immediate family to protect and 17 per cent of people felt that they could get the same level of cover from their private health insurance policy.
Rounding out the top five reasons why the main income earner doesn’t have life insurance was the belief that life insurance was redundant if a person had other assets that can be drawn on in the event of death (16 per cent), and that life insurance was simply unimportant (13 per cent).
Geography and gender differences were particularly pronounced in some of the reasons respondents gave for not holding insurance, with men more likely to think they are immune to health risks.
Men were also more likely than women to think that their health insurance would give them the same benefits as a life policy (19 per cent versus 14 per cent).
It’ll never happen
Minto concluded that the results reveal just how much more the industry needs to do to educate people on the benefits of life insurance and how it differs from other forms of insurance and social supports.
“The vast majority of Australians benefit from holding life insurance,” he said. “It isn’t just for people with dependents or those who think that, because they have assets such as a home, that their family will not need financial assistance should they be no longer able to work through illness or death.
“Men also need to think more about the financial risks to their families and dependents from them being unwell. It is not enough just to think it will never happen.”
Well, we could make a start to overcome the perception life insurance is “expensive’ by stop using the term ‘premiums’ for the fees consumer pay! Subconsciously, this says expensive, surcharge, additional payment, extra amount. Think about it. Just because traditionally as an industry we’ve always used this term means we should continue to.