Sam Tremethick (left), Christine Cupitt and Bill Tsouvalas

Households are facing unprecedented pressure to keep a roof over their heads, pushing life insurance cover down the list of essential items for households.

The economic conditions has forced the insurance sector to admit that it needs to find better ways to advocate for the importance of having life insurance policy.

The realisation comes due to research into cost of living pressures reveals that 44 per cent of Australians don’t have any life insurance and have no intention of taking out a policy in the future.

Conducted by Savvy and released last week, the research found 46 per cent of women and 42 per cent of men say they don’t have – and don’t want – a life insurance policy.

That leaves a little under a third with basic life insurance provided through their superannuation fund (33 per cent) and only 11 per cent who have taken out a life insurance policy through a dedicated provider.

The research shows even a temporary shortfall of income could provide disastrous for many families. Meanwhile, 13 per cent surveyed said they don’t have life insurance as of yet, but are considering buying a policy.

Meanwhile, net policy revenues dropped 6.3 per cent to $3.8 billion for the quarter ending 31 March, which highlights the impact that cost of living pressures are having on the life insurance sector.

It reported a net profit after tax of $1 million and a return on net assets of 3.8 per cent, which was slightly below the results from the previous year. These are the latest quarterly figures from APRA.

Risk products returned a net profit after tax of $872 million, while individual lump sum and individual disability income insurance business reported weaker profits than the previous year because of an increase in net policy expenses, the figures reveal.

Step up

Savvy CEO Bill Tsouvalas urged the insurance industry to make life insurance more appealing to those who think it’s out of reach.

“We’ve got to offer affordable options, educate people on the value of coverage, and let them customise policies to fit their needs,” he tells Professional Planner.

Digital solutions, transparency and teaming up with financial institutions can also make a real difference, as can looking for ways to build trust, he says.

The industry should look for ways to bundle income protection insurance, total and permanent disablement, trauma and accident policies to create value, he says.