Australians are still strongly price-sensitive to life insurance and might be motivated to change their attitude if it received the same tax treatment as health insurance, according to new data released by major insurer MetLife and the Financial Services Council (FSC).
The research directly pointed to the manner in which tax incentives such as those provided with respect to health insurance could act to overcome the inertia in evidence among Australians with respect to obtaining and maintaining life insurance.
The research, titled Apathy to Action, was launched ahead of the FSC Life Insurance Conference, with the key finding that the Australian insurance industry needs to find ways of motivating people to obtain cover.
This was in circumstances where the survey pointed out that the top three reasons why consumers say they don't buy life insurance and income protection are related to price-sensivity:
1. Too expensive;
2. Waste of money/poor value; and
3. No spare money.
The research then contrasted this with the top three things that would most motivate consumers to purchase life insurance:
1. A tax incentive from the Government;
2. Purchasing through superannuation without a drop in income; and
3. Taking out a minimum level of insurance to avoid extra tax.
Commenting on the research findings, FSC chief executive John Brogden said it showed Australian consumers were willing to insure their visible assets such as their house or car, but most did not consider protecting their lives and their health as a priority.
"The research is clear − Australians don't understand the benefits of taking out life insurance," he said.
"As an industry, we need to change the way we talk to Australians about life insurance if we are to close the $1.1 trillion death and disability under-insurance gap," Brogden said.
MetLife chief executive Damien Green said the research showed that most consumers didn't understand life insurance terms such as total permanent disability and income protection, with most consumers only thinking of life insurance as ‘death cover' rather than the range of protection solutions available.
"The industry needs to work together to develop life insurance products that consumers want and will benefit from," Green said.
