Advice debate rages as car insurance topples financial security

New research commissioned by the Council of Australian Life Insurers (CALI) found that life insurance has fallen down the ranks when it comes to what working Australians prefer to insure.

Of the 5,000 adult Australians surveyed and across their separate age cohorts, life insurance was the last type of insurance they chose to have while motor vehicle insurance came out on top.

Considering the national average or all ages, 79 per cent were most likely to insure their motor vehicles, followed by health insurance (66 per cent), home and/or contents insurance (62 per cent) and life insurance (34 per cent).

According to the data, baby boomers and Generation X who are approaching retirement (55 to 64 years old) chose to insure material possessions over their financial security, with 90 per cent insuring their vehicle and 82 per cent insuring their home and/or contents compared to less than a third (29 per cent) taking out life insurance and only 60 per cent with health insurance.

Those in their mid-career (35 to 54 years old) had the highest level of life insurance policies out of the three cohorts (32 per cent), with motor vehicle insurance still taking the top spot (84 per cent), followed by home and/or contents insurance (69 per cent) that just edged out health insurance (66 per cent).

Those in the ‘career starter’ stage (18 to 34 years old) had a much more spread-out view of insurance, despite motor vehicle still coming out on top with its lowest score (68 per cent). This age cohort was also the only one to have health insurance (68 per cent) top home and/or contents insurance (45 per cent), with life insurance falling in at 32 per cent.

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

“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 when times get tough.

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

According to the data collected from the survey, 40 per cent want advice that is more tailored to their personal needs and goals and can help them decide on what insurance products or policies best suit them. Cupitt said life insurers would be able to offer this type of advice when asked by customers at no extra fee, under tranche two of the Federal Government’s Delivering Better Financial Outcomes
legislation.

“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,” Cupitt said.