In a survey conducted by Risk Adviser, readers were asked whether they believe the federal government should introduce incentives to take up life insurance.
Of the 250 readers who participated in the survey, 78.4 per cent (or 196 respondents) believed that the government should introduce incentives, whereas 21.6 per cent, or 54, believed it should not.
Speaking to Risk Adviser, MediBroker managing director Aaron Zelman said introducing an incentive to buy insurance could make a “significant difference” in tackling the nationwide underinsurance problem.
Mr Zelman added that a government co-payment such as a ‘first insurance owners grant’ would be a great benefit to encouraging more Australians to take up risk insurance.
“Even if the level of co-payment was relatively small, there could be great benefit in having the government promote this scheme, raising awareness around the underinsurance issue,” Mr Zelman said.
“There would also be a tie in to the next generation of policy owners who are already aware of first home owners’ grants and would be keen to take advantage,” he said.
Echoing Mr Zelman’s comments, Blenkhorn Financial Planning principal Julia Blenkhorn told Risk Adviser that the introduction of incentives would be a “win-win for all”.
“It would reduce the reliance on sickness benefits and the disability pension that currently runs into millions of dollars,” Ms Blenkhorn said.
“When you read the plethora of statistics regarding the state of health of Australians, coupled with the findings that we have one of the highest life expectancies in the world, it would be apparent that it is in our interests as a nation to have as many people covered by life insurance as we can,” she said.
However, Marshall Wealth and Investment Advisers principal Mark Marshall pointed out that introducing an incentive is not a suitable solution.
“There has to be a need before the consumer will properly engage,” Mr Marshall said. “For example, in most states of Australia, self-employed persons are not covered by their state’s workers compensation scheme.
“The self-employed cannot enter into an industrial, mine or construction workplace without having in place appropriate level of sickness and accident insurance cover.
“What if an employer takes into account an applicant’s personal insurance portfolio as part of their employment application?” Mr Marshall asked.
“How long before everyone has their own personal insurance portfolio. A change in the foundation of social norms will produce the desired behaviour,” he added.
Few people buy insurance related products because until the are old enough to recognise responsibility, many consider themselves bullet proof or likely to die at a young age anyway without dependants, so there’s no need.
But many do end up buying car insurance and house insurance because all of a sudden they have a risk to protect, normally within a relationship, which is greater than the one they can afford to lose.
In saying that, in this current economy, many are failing to renew cover and taking on self insurance or under insurance. Others simply expect the community will step in to help out when a disaster hits or rely on government assistance.
It is not up to the government to subsidise insurance premiums unless at the taxpayers expense.
Conversely, it should also not be the taxpayers expense to support those who won’t support themselves and rely or expect the government support.
Perhaps if there was a compulsory scheme of a minimum sum insured say $50,000 for a set premium such as a group life plan, possibly even tied to medicare, then it could incentivise more to take it up.
Those who don’t have medicare are self-insuring in any case, albeit at the taxpayer expense, but with less beneficial options.
I respect peoples views above, however you fail to understand that whenever the Govt subsidizes anything it virtually doubles in price overnight…consider house prices; gas conversions; water tank subsidy all have the outcome of increased pricing… .suppose the insurers and reinsurers will be happy with that. And as far as the concept of employers checking an employees Insurance portfolio, I think you are dreaming. Privacy and Discrimination laws spring to mind.