Superannuation based life-insurance has boosted the number of people taking out some form of life insurance but has created a false sense of security and widespread levels of incorrect insurance cover, according to research conducted by Zurich Financial Services.
It found that individuals with cover through a superannuation fund “assume that life insurance is a homogeneous 'box they have already ticked’”.
As a result of this approach some people were both uninsured and mis-insured, having taken out the wrong insurance cover for their needs.
The research polled 394 employed Australians who were required by law to be members of a superannuation fund and discovered a significant lack of knowledge about the level and type of cover offered via superannuation-based life insurance.
Just over half of the survey respondents were aware they had life cover through their superannuation fund, with Zurich stating this finding most likely indicated a lack of knowledge instead of lack of cover.
However the research also found that of those who were aware they have life insurance via their superannuation fund, 11 per cent believed it also covered traumatic illness, 7 per cent hospital expenses and 5 per cent optical and dental expenses normally covered under private health insurance.
Similar lack of awareness was seen in the area of income protection insurance, with only a quarter of respondents aware of their level of cover and only 15 per cent able to correctly identify the waiting period before payments began.
Zurich Life and Investments head of marketing Richard Dunkerley said the knowledge gaps pointed to the need for further education and advice around insurance.
“The research findings are a timely reminder for consumers to become better acquainted with the detail of their policies, ideally by seeking qualified advice, to help avoid the downside consequences of the 'mis-insurance’ gap,” he said.
“The results further indicate the need for a more comprehensive program of literacy regarding life insurance to raise the general level of education and understanding amongst Australians,” Dunkerley said.
“There is a duty of care on all participants within the superannuation, advice and insurance sector to do more to educate consumers at every turn,” he said.
