New research from 89 Degrees East, which was commissioned by CALI, shows that despite a third of Australians showing an interest in getting advice in the past three months, the number of people who receive professional advice remains low.
The research also found that 34 per cent of Australians lean on their loved ones to tell them what to do about their life insurance cover.
“This shows a serious gap in the quality of advice Australians are getting about their life insurance,” said CALI chief executive officer Christine Cupitt.
“We believe people are turning to their family and friends because the options for getting professional advice are too limited and too expensive.”
The cost of living is also having an impact on life insurance, with two-thirds (66 per cent) of respondents saying they are concerned that cost-of-living pressures will impact their ability to afford to take out or continue paying for life insurance.
This is most pronounced among parents with dependent children living at home and those aged 45 to 54 years old.
The research also found that people are equally likely to use search engines and digital calculators as they are to contact their life insurer directly when reviewing their cover, while just 38 per cent said they would speak to a financial adviser.
Just 8 per cent would turn to social media to determine their life insurance needs; however; that number rises to 20 per cent among those aged 18 to 24 years old.
“It’s critical that Australians have better access to affordable professional advice when they need it most, so they can make informed decisions about how to protect their future,” Ms Cupitt said.
“Australians shouldn’t have to pay $3,500 on average for financial advice, especially when life insurers stand ready to provide limited advice about their products which can give people added peace of mind.”
Ms Cupitt noted that the research also showed that more than 90 per cent of Australians are satisfied with the service they receive from their life insurers directly.
“There is a clear unmet financial advice need in Australia and a growing underinsurance problem that is leaving people unprotected when times get tough,” she said.
“Almost one in two Australians say the main driver for obtaining life insurance is for the financial protection and sense of security it provides loved ones, and we must ensure they’re getting the right advice to make that a reality.”
CALI also called for an expansion of the type of advice life insurers are allowed to provide their customers in the next stage of its Delivering Better Financial Outcomes package.
“Of course, this should only happen with appropriate limitations and strong consumer protections to ensure better outcomes for Australian workers and their families,” Ms Cupitt said.
“Life insurers take their legal obligations very seriously to act in good faith and prioritise the interests of the people they serve.”
When 80% of an industry such as risk advisers quit, then the survivors are less accessible simply because there are fewer of them.
Who is responsible for such a massive reduction? The blame goes to the Royal Commission for covering advisers in red tape and the insurance companies with their Trowbridge ‘report’ and LIF. I would place it at about 50/50.
Insurance companies do not see their part in the disaster. Instead they doubled down with the Levy report and they may even succeed, appointing a lot of salespeople.
[i]especially when life insurers stand ready to provide limited advice about their products[/i]
Again, sellign people something isn’t quite the same as getting advice. Will the Life insurers go back to pounding the pavement and door knocking to [s]sell their product [/s]provide advice.
The life insurers are the ones making the costs high because they are so hard to deal with.