Research commissioned by CommInsure and conducted by Newspoll has highlighted the unpreparedness of many Australians when it comes to dealing with a death or a terminal illness.
The CommInsure Life Insurance Survey, which gauged the attitudes of 1,220 Australians aged 18-64, found that 70 per cent of respondents would be forced to sell their personal assets – including their family home – in the event of a death or terminal illness.
In addition, 56 per cent of Australian families would have to rely on support from Centrelink if a nightmare scenario were to unfold, according to the research.
CommInsure general manager retail advice Tim Browne, who will be speaking at the Financial Services Council Life Insurance Conference later this month, said the research reinforced the need to address the high levels of underinsurance in Australia.
Only 36 per cent of Australians aged 18-24 hold life cover, although the figure rises to 63 per cent for those aged 25-34.
However, the level of life cover drops down to 53 per cent for the 50-64 age bracket.
People are reluctant to boost their levels of insurance to an appropriate level, Browne added.
"When we asked consumers why they didn’t get extra cover, the response we received was typically that they couldn’t afford it," Browne said.
According to the research, 56 per cent of respondents believe they cannot afford extra cover; 50 per cent indicated that they have enough in their superannuation already; and 46 per cent said it simply wasn’t a priority to boost their cover.
"We can do more to remind Australians that they can take out cover through their super. The benefit of doing this – especially for those for whom affordability is an issue – is that the premium is deducted from their super," Browne said.
Australians also need access to financial advice about the appropriate level of cover for them – something that would be severely limited if commissions on individual insurance contracts were banned, he said.
"The consequence of a ban on commissions would be that a number of clients would not be able to afford both the insurance premium and the cost of advice that would go with the interaction," Browne said.
