Research from the Council of Australian Life Insurers (CALI) last year found that 68 per cent of Australians are concerned that the high cost of living will hinder their ability to continue affording their life insurance cover, while 23 per cent said they would consider cancelling their cover if affordability were to become an issue.
Meanwhile, the latest statistics from DEXX&R’s latest Life Analysis Report revealed growing attrition rates and drops in premiums across the board for the year to September 2024.
In exploring this trend, iExtend identified a range of key factors driving life insurance policy cancellations in Australia, one of which is the increasing cost of premiums.
According to Deloitte’s 2025 Global Insurance Outlook, life insurance premiums are expected to rise by 1.5 per cent in advanced markets this year, which iExtend claimed “erodes confidence in the value of sustaining life insurance for the long-term”.
This is compounded by sustained cost-of-living pressures with the 2.4 per cent rise of the consumer price index in the 12 months to the December 2024 quarter, leaving many looking for ways to cut discretionary spending.
Plus the inability to access affordable financial advice, largely as a result of the sheer lack of operating advisers, with Wealth Data finding just 15,516 active advisers as of the week ending 23 January, and compounded by the rising operating costs for advice businesses.
As a result, iExtend said many Australians are unable to consult a professional and assess their options prior to cancelling life insurance policies.
Meanwhile, chronic health conditions have become increasingly prevalent among Australians, with two in five (39 per cent) Australian workers living with a chronic condition, which may significantly impact their life insurance policies and lead them to simply cancel their cover altogether.
Furthermore, as Australians continue to age and the intergenerational wealth transfers and subsequent changing hands of around $3.5 trillion in assets by 2050, iExtend suggested that wealth redistribution and estate planning could impact decisions regarding the holding of life insurance policies.
Chief executive of iExtend David Sarkis said that in the current uncertain economic environment, more Australians may waiver in their commitment to life insurance cover, leading more to consider cancellation.
“As a result of a range of financial and demographic pressures, we have seen more Australians change their view of their life insurance and are seeking to cancel it,” Sarkis said.
“The impact the cost of living is having on life insurance cannot be underestimated, with many Australian households feeling the pressure of daily life, leading them to consider cancelling their policies to alleviate the immediate burden of meeting premium payments.
“iExtend is working with advisers and their clients to ensure they make informed choices about the future of their life insurance policies, decisions which impact families and generations of Australians.”
I took out a life policy over thirty years ago, for $100 000. Now, I’m living on a pension, and it’s costing me $460 per month for the premium. The son I took the policy out to protect, decades ago, is legally blind, but earning an amazing living. Very hard to cancel, but I need to eat, so no choice.
I just received the usual annual renewal email from a major insurer notifying me of increases to a particular clients premiums……..get a load of this…..
Life Cover….12% premium increase (no change to sum insured)
TPD Cover….55% premium increase (no change to sum insured)
Trauma Cover….30% premium increase (no change to sum insured)
Income Protection….19% premium increase (no change to sum insured)
People are cancelling because they simply can’t afford such savage increases. Okay, now we can re-write these policies elsewhere via insurers offering “honeymoon premiums” because “Best Interest Duty” justifies this, but even those insurers will jack up the premiums in a few years time and we’ll be back to where we are now.
All of us (advisers) saw the writing on the wall, before the wall was constructed by the Life Insurers sneakily goading Josh-from-accounts into hammer nails in our coffins. We’re too smart for you muppets and those of us who are still standing have found far more secure ways of protecting our livelihoods. Bye, bye, Insurers.
What a load of rubbish! You are a sook, the opportunity for risk has never been better, the banks that used to write stacks upon stacks of insurance across personal and business insurance are out, people are still borrowing to buy houses and business that need protection. All of this leads to opportunity, smart advisers that are still in business get that which you are definitely not one. It’s probably for the best you have gone and are doing something else. Ciao Sook.
Premiums. Nothing more, nothing less.
Policies are being cancelled because life companies are gouging legacy policy holders. We’re actively orphaning risk policies now because we expect many to be cancelled in coming years.
LIF 100% premium increases.
FARSEA 45% Advisers wiped out and much higher % of older, risk only advisers gone.
Ignoring the marketing hype, the answer to your question is simple: LIF, duration based pricing and gouging of legacy products. I what I forgot – dumb-aRsed CEOs WHOSE only focus IS ON THEIR bonus which is a course attached to shareholder value. That IS, today’s shareholder value
Take off the rose coloured glasses. Nothing to do with the economy , everything to do with the exorbitant increases in premium and upfront discounts that drop off on first 2 anniversaries.
Number 1 reason why they’re being cancelled is insurers increasing premiums by criminal amounts!!! White collar crime at its best…. convince me otherwise!
Lack of advisers isn’t the cause of high advice costs. Bad regulation is the cause of high advice costs.
Bad regulation is also the cause of a lack of advisers. Bad regulation is the root cause of pretty much all the problems in financial advice in Australia.
The number one reason people are cancelling their policies is the incredible increases in insurance premiums driven by Life Insurance Companies, and the where are the premium reductions promised when Commission rates were reduced to their current paltry level ?