Financial advisers and the life insurance industry have failed in communicating the value of life cover to the majority of Australians and potential clients, new research has found.
CoreData’s report Risking Everything, commissioned by the Association of Financial Advisers (AFA), found more than a third of those who bought their policy through their superannuation fund or direct from the insurer – and were not advised on their life insurance – claimed they did not need advice.
A further 44 per cent were not willing to pay fees for advice on life insurance or were not content with the fee structure, but AFA chief executive officer Richard Klipin said the remuneration model presented only part of the issue.
“Mainly the issue is demonstrating value, communicating that to clients… [who have] the happy-go lucky approach and attitude,” Klipin said.
“Consumers ask: ‘Do I get what I want, do I know what I’m getting, do I know what I’m paying for and do I feel good about that value exchange?’ The research has shown time and time again that it’s not the payment method, it’s the combination of product and value,” he said.
Moreover, the report stated risk specialists should understand that life insurance is not a key driver of the advice relationship, “so it may be best framed in the context of a broader conversation about financial planning”.
More than 90 per cent of those who were advised on their life insurance felt confident they understood what type and how much life cover they needed, around 10 percentage points more than those who never received advice about their life cover.
Although consumers who get advice about their life insurance find the relationship with their adviser very valuable, Klipin said the AFA was also concerned about the fact that most Australians found their home and car insurance more important than life cover.
