Customers exiting living insurance at 45
Many people are getting out of life insurance policies at age 45, one-and-a-half years before an average claim is usually made, life insurer TAL research revealed.
Customers are discontinuing one or more of three types of living insurance policies - disability cover, critical illness/trauma and income protection at 45, while the average age for a claim is 46.5.
TAL Group CEO Jim Minto said the finding is unsettling as customers are putting a stop to their policies at a time when they are most likely to need financial protection.
“Basically, those people are betting that statistical averages will not apply to them so they can use the saved money for some other part of the household budget,” he said.
A person takes up life insurance at 37.5 years of age on average, meaning the average lapse is 7.5 years later at 45, while the average claim is made at 46.5.
The research also showed half of all current claims for life insurance are made within 24 months of them taking out that policy, compared to 40 per cent two years ago (two in five).
Additionally, the time between taking out income protection and making a claim is now 1.25 years shorter than it was two years ago, coming down from six years to 4.7 years.
“We know that cost-of-living pressures are continuing to force people to rethink their domestic budgets but it is very unfortunate that those people who stop their policies for this reason do not see financial protection as essential for themselves and their families,” Minto said.
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