Irene Guiamatsia

Life insurance is viewed as a secondary measure of financial security, behind saving and investing, despite around a third of adult Australians being covered by some form of insurance, according to research from Investment Trends.

The ‘2024 Consumer Insurance Needs Report’ found that out of 20 million adult Australians, 6.7 million are covered by some form of life insurance.

On a scale from zero to 10 (with 10 being most important to financial security), those who had a partner and children considered life insurance (6.5) to be less important than investing (7.1) or saving (8.0). Those figures were little different for those who were partnered with no kids, single and living with a parent, or single and living alone – all prioritised life insurance behind savings and investments.

Investment Trends head of research Irene Guiamatsia says that before commencing this research she had a good appreciation of the immensity of the insurance gap, but wanted to dig further.

“People don’t proactively go out there and seek insurance,” Guiamatsia tells Professional Planner.

“The original question for us was ‘why?’. Certainly, if you look at financial security and you want to build up wealth, you also need to protect yourself and your family from financial risk.”

Guiamatsia says people don’t naturally think about protection in the same way they think about savings or investments, which people can see grow over time.

“But for protection, whether it’s protecting your assets or protecting your health, that lack of tangibility consumers have creates a bit of distance in their own appreciation for how that contributes to their financial security,” she says.

“We have identified that as an area that insurers need to proactively work at demonstrating to consumers.”

Whether this oversight is due to consumers’ negative connotations towards insurance, in that it is seen as a lifeline in a worst-case scenario rather than as a wealth creator, Guiamatsia says the answer is nuanced.