A new report from a major life insurer has pointed to the value of insurance in supporting injured and ill Australians to meet their living costs and re-enter the workforce, as discussions around the future of the industry intensify in the face of regulatory change.
MetLife’s Value of Life Insurance report stated that life insurers were able to pay out double the amount per week in benefits to injured and ill consumers compared with government disability payments, as well as saving consumers hundreds of dollars a week in personal savings that they would need to accumulate in order to provide a nest egg for loved ones in the event of their death.
“Life insurance is more financially efficient than a savings strategy. This is because it pools the risk of individuals as a collective group which generally makes premiums less costly for the individual policyholder,” the report said.
“Life insurance also provides more adequate financial support than social security benefits. While Australia’s social security system can provide some relief to families who have lost their main income earner or for individuals who are no longer able to work to their full capacity, in many cases, it generally cannot maintain their standard of living.
“On the other hand, life insurance provides households with meaningful payments to mitigate the impact of these life-changing events.”
According to research done by the life insurer in 2020 in the US, the life insurance industry also had a significant positive impact on the economy overall by redirecting consumer spending towards productive investment, stabilising the financial system and creating ‘patient capital’ with long-term investment horizons.
The report also pointed to the value of insurers in supporting employees to retrain and return to work after an injury, noting that 70 per cent of MetLife claimants that worked with a rehab provider between 2018 and 2020 had seen an improvement in their functional health status as assessed by WHO standards.
“[Rehabilitation] tools range from help in navigating available support services to physical and psychological conditioning programs enabling focus on building strength, stamina and mental health to return to health and eventually back to work,” the report said.
With the industry under strain as a result of declining profits and the government’s 2022 Quality of Advice review to take a closer look at risk commission settings, MetLife chief executive Richard Nunn said it was important that the value of life insurance be better understood by consumers and other stakeholders.
“Life insurance serves a noble purpose by providing a vital safety net should the worst happen, but we need to make its value easier for people to understand. The industry is under the microscope, facing significant regulatory change and shifting consumer expectations. Now is the time to work together to adapt, educate and remain relevant,” Mr Nunn said.
“It is imperative we continue to build awareness of the advantages of life insurance, not just to the individual consumer but to the economy and the community.”
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