Lion’s share of life insurance sold through superannuation
New research undertaken by CommInsure has reinforced the long-term implications of the Government's remuneration restrictions around the sale of life/risk insurance within superannuation.
The research, which identified that Australians held a false sense of security with respect to superannuation, also revealed that while superannuation represented the primary vehicle via which people accessed life insurance, advisers still played a key role.
On the list of factors likely to trigger people to purchase life, TPD or income protection insurance, the top five ingredients were:
- Buying a home/getting a mortgage (28.4 per cent);
- The birth of a child (24.2 per cent);
- Advised by a financial adviser (20.7 per cent);
- Preparing a full financial plan (18 per cent); and
- Getting married (15.1 per cent).
However, the degree to which the Future of Financial Advice changes have impacted advisers is made clear in the finding that two-thirds of survey respondents were covered for life insurance via super only, and that only 8.3 per cent had life cover solely outside of their superannuation.
Asked what best described how they took out their life insurance, 44.1 per cent of the survey respondents said they had done so through their super fund with no assistance from an in-house adviser, while 13.5 per cent said they had done so through a financial adviser, and 13.1 per cent said they had done so through their super fund utilising an in-house adviser.
The limited impact of direct sales was indicated by the 11.9 per cent of respondents who said they had purchased their cover directly from an insurer.
The CommInsure analysis said that Generation X were the most likely to use their own financial adviser to purchase life insurance, while pre-boomers were much more likely to go direct.
One of the key findings of the CommInsure research was that life insurance obtained via superannuation was rarely topped up.
Only one in five in this category topped up the cover, with the most likely candidates being males with dependents.
Commenting on the research material, CommInsure general manager, retail advice Tim Browne said many people were taking a set-and-forget approach when it came to insurance - holding cover in their super but typically not topping it up or taking advice.
He said this created a false sense of security that insurance was taken care of.
"But a worst case scenario can leave many families ill-prepared and facing significant lifestyle adjustments," Browne said.
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