‘Stretched far too thin’: Cost of living hits life insurance

In its new State of Australia’s Safety Net report, the Council of Australian Life Insurers (CALI) said Australians need more ways to access financial advice as both cost-of-living pressures and mental health challenges are increasing.

Among the top findings in the report, which surveyed more than 5,000 Australian workers, was that the financial advice needs of young people (18–34 years), women, and those in their mid-career (35–54 years) are not being met.

This carried across into their mindset on life insurance, with two-thirds of Australians concerned that cost-of-living pressures will impact their ability to afford it in the future.

“This report shows that rising cost of living, increasing mental health challenges, and global economic shocks are putting intense pressure on Australians. They need someone to talk to about their financial future now more than ever,” said CALI chief executive Christine Cupitt.

“Australia’s safety nets are stretched far too thin, and people are increasingly worried about falling through the cracks. Life insurers have a critical role to play to ensure that doesn’t happen.”

Dr Rebecca Huntley, the research director of 89 Degrees East, the agency that conducted the research on behalf of CALI, added that regardless of age, most Australians aspire to be more financially resilient and “this is only becoming more important for them in a cost-of-living crisis”.

“Higher living costs and the uncertain economic environment have led to increased stress levels and concern about mental health in our community,” said Dr Huntley.

“People know that mental health challenges can have a lasting impact on their personal finances due to time off work and the cost of accessing treatment and support.”

According to CALI, other than the federal government, life insurers are the “largest provider of financial support for people experiencing mental health concerns”.

The research also found that Australians are more likely to turn to family and friends for help or seek government assistance payments than look to their life insurer for help in the event of a mental health challenge.

Indeed, only a third said they would talk to their insurer for this assistance, despite almost 90 per cent of Australians responding that they think it’s important they’re able to access financial support through their life insurer in this situation.

“This report highlights that Australia’s life insurers provide a fundamental safety net and pathway for people to secure their future, no matter what happens throughout their lifetime,” said Cupitt.

“We have an advice accessibility crisis in this country. In the past three months alone, almost a third of Australians considered seeking financial advice on life insurance, but just 8 per cent actually received it.”

CALI also used the report findings to reiterate its stance that there is a “critical need” for the passage of the upcoming tranche two of the Delivering Better Financial Outcomes reforms, specifically pointing to the ability for life insurers to “provide simple advice on their own products when customers ask them to”.

“This report shows that young Australians, mid-career workers, and women in particular want to learn more about what’s out there to help protect them,” Cupitt said.

“They’re under pressure at work and at home, they’re worried about the cost of living, and they’re intrigued by the possibility of safety nets to increase their financial resilience and overall wellbeing.”