Millennials need to be more engaged with insurance options, according to Andrew Kennedy, risk adviser at HLB Insurance Services.
Kennedy said the issue millennials faced was getting engaged with insurance and making a conscious decision about whether they're going to have it.
“It's too easy to let the default rule whatever their superannuation provides, and then assuming that is correct for them,” Kennedy said.
“Or conversely deciding it’s not correct for them and just cancelling it because all they see is a premium coming out of the bank account for their super fund without knowing what it does and what it's providing.”
This apathy was also supported by having parental support as a safety net while transitioning into fully independent adults.
“One of the conversations I've had with people who are 20-25 [years old], the default assumption is their parents will look after them,” Kennedy said.
“But the counter argument I have to that is, parents [of people that age] are getting towards the point where they're going to retire.
“Do you really want to be a burden on your parents if you can't go back to work ever again, when they're supposed to be retiring and enjoying every moment?”
Although it’s common for people not to get engaged in super until they’re over 30 or 40, there is a much greater risk for not taking insurance seriously when you’re in your 20s.
“The argument I always make is, in your 20s and 30s, your biggest risk is not being able to work again, not are you going to have enough for retirement,” Kennedy said.
“If you're never able to work again, that's a far greater financial risk than potentially eroding a superannuation balance by paying insurance premiums and maybe not having enough to retire.
“If you're 20 and you've got 45 years ahead of you of no income, that financial cost is way more than not having enough money in superannuation.”