Australians are misinformed about the purpose of life insurance and many incorrectly believe they have sufficient cover through their superannuation, according to new research from Zurich.
The research polled 394 employed Australians to pinpoint whether or not people properly understand what they are and are not covered for through their superannuation-based life insurance, and the extent to which this aligns with their own stated risk priorities.
Almost 80 per cent of those surveyed said they had never conducted an analysis of their own life insurance needs.
Of those who are covered by their superannuation group life policy, 11 per cent incorrectly believed they were covered for traumatic illness, hospital expenses (7 per cent), retrenchment (6 per cent) and even dental and optical costs (5 per cent).
Speaking to ifa, Zurich Life and Investments head of marketing Richard Dunkerley said the findings should act as a "confidence boost" for financial and risk advisers, demonstrating there is a vital role for these professionals to play.
“[The research] shows that it is incumbent on all stakeholders to do more to educate consumers," he said. "For advisers, there is a difference between advising and educating and those who go the extra mile in terms of improving their client's overall financial literacy are likely to reap rewards in terms of customer loyalty and a deeper relationship.
"The confusion about the various types of insurance and their different purposes shows the value in the adviser getting a broader picture - for example, of their client's health insurance situation."
Mr Dunkerley said the findings are a timely reminder for consumers to become better acquainted with the detail of their policies to help avoid the downside consequences of the ‘misinsurance’ gap.
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 among Australians, Mr Dunkerley added.
"The report itself can be used as a conversation aid with clients - highlighting the fact that the client needn't feel embarassed about their lack of knowledge - many, many people are in the same boat," he said.
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