Majority ill-prepared for loss of 2nd income, report finds

The MetLife Adviser-Client Relationship Report 2018 found that of consumers with life insurance who are married or in a de facto relationship, 73 per cent have more than one income earner in the household.

Of this group, 58 per cent state that they wouldn’t be able to maintain their existing lifestyle for any longer than two years should the secondary income earner be unable to work.

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The research found that a significant number of these secondary breadwinners are working casual or part-time. Of these workers, 48 per cent of women and 25 per cent of men are the parents of dependents.

MetLife Australia said this group holds lower levels of insurance in all categories when compared to their full-time counterparts.

Specifically, it found that death cover is held by 70 per cent of casual and part-time workers compared with 81 per cent of the overall group, total and permanent disablement (TPD) cover is held by 51 per cent compared with 60 per cent overall, and income protection is held by 48 per cent compared with 58 per cent overall.

But the largest difference is seen in trauma cover, with only 4 per cent of casual and part-time workers covered compared with 35 per cent of the overall group.

Commenting on the findings, MetLife Australia head of retail sales Matt Lippiatt said that underinsurance is a real problem in Australia, particularly among casual and part-time workers, and that there is clear evidence that many families are unprepared for the loss of secondary income, with greater focus often given to the primary income earner.

“Particularly for families with children, if one partner is staying at home or working part-time, it can be just as important to insure them as it is the primary breadwinner,” Mr Lippiatt said.

“Consider, for example, the cost of finding appropriate childcare or the possibility of the main income earner having to reduce their working hours to help take care of children or a sick partner.”

The report examined consumer and small to medium enterprise (SME) attitudes to purchasing life insurance through a financial adviser, surveying 1,191 people in total.