Australians prioritising insurance on possessions over themselves

A survey of more than 5,000 working Australians found that, on average, around eight in 10 (79 per cent) people have car insurance while just a third (34 per cent) have life insurance.

The independent research, commissioned by the Council of Australian Life Insurers (CALI), showed that almost four in 10 (38 per cent) of those aged 35 to 54 had some form of life insurance, the most of any age group.

These “mid-career” Australians’ material possessions were also relatively well covered, according to the findings, with 84 per cent having car insurance and 69 per cent holding home and contents cover.

Notably, those aged between 55 and 64 were the most likely demographic to have a car (90 per cent) or home and contents insurance (82 per cent) but were the least likely to have health (60 per cent) or life insurance (29 per cent).

Meanwhile, young adults between the ages of 18 and 34 were just as likely to hold health insurance as they were to have car insurance (68 per cent). Though, unsurprisingly, they were the least likely to have home and contents cover (45 per cent), while falling in the middle in terms of life insurance (32 per cent).

As the high cost of living continues to put pressure on Australian households, the research found that if they needed to make cuts to their budget, people are almost three times more likely to get rid of their life insurance compared with their car or home cover.

CALI chief executive Christine Cupitt suggested that this, at least in part, stems from a lack of access to affordable financial advice in Australia.

“The advice accessibility crisis in this country is leaving far too many people underinsured and unprotected when it comes to their future financial security,” Cupitt said.

“The advice needs of Australians are not being met, particularly for those who can’t afford to pay for a financial adviser in a cost of living crisis.”

In December last year, Financial Services Minister Stephen Jones announced that tranche two of the Delivering Better Financial Outcomes (DBFO) reforms would likely allow super funds and insurers to employ a new class of advisers to provide simple financial advice.

This has since become a hot-button issue, with reports of clashes between industry stakeholders over the issue.

As the proposed legislation would prohibit companies from charging clients for the services of this new class of adviser, it would be nearly impossible for most advice practices to employ them as they would be unable to absorb the costs, an issue super funds and insurers are unlikely to face, creating an uneven playing field for advisers.

Since then, Cupitt has voiced her support for this on several occasions. She has once again argued that, in order to remedy the underinsurance issue in Australia, insurers should be able to provide basic advice to their customers.

“This is about people building strong financial safety nets for themselves and their loved ones. Getting the right advice can set them up for the future, getting no advice can leave them with nothing to fall back on when times get tough,” Cupitt said.

“With the ongoing cost-of-living pressures, people need someone to talk to about their financial future now more than ever.

“Less than a quarter of people are telling us they want basic information only, proving just how critical financial advice reforms will be to giving Australians the kind of advice they want, when and where they want it.”