Australia’s
$3.1 trillion
underinsurance
crisis
February 2012
CommInsure Life Insurance Survey
• Australians are currently underinsured by $3.1 trillion *
• Only half - 56% - of us have life insurance
• Majority of those have insufficient cover
• Average advised client is insured for $308,212^
• Non-advised clients insured for only $99,954^
*Source: Rice Warner 2011
The underinsurance issue
7 in 10 Australians know someone who’s suffered a trauma, yet only 8% have trauma cover themselves. 7 in 10 Australians know someone
who’s suffered a trauma, yet only 8% have trauma cover themselves.
Australia is underinsured
56%
47%
20%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Life insurance Through super Separate from super
Percentage of Australians
Life insurance National figures
After a brush with death we’re more likely to go on holidays (46%) than get insurance (34%)!
After a brush with death we’re more likely to go on holidays (46%) than get insurance (34%)!
Young and low income earners most at risk
0% 20% 40% 60% 80%
50-64 35-49 25-34 18-24
Percentage of Australians
Age group
Life insurance by age group
Separate from super Through super Life Insurance
0% 20% 40% 60% 80%
> $80K
$40K - $79,999
< $40K
Percentage of Australians
Household income
Life insurance by household income
Separate from super Through super Life Insurance
Younger Australians and low income households have the highest underinsurance rate.
Younger Australians and low income households have the highest underinsurance rate.
Default cover
65%
18% 17%
0% 10% 20% 30% 40% 50% 60% 70%
Default only Increased Can't say
Percentage of Australians
Level of life insurance National figures
Most of us (65%) settle for the
default level of life insurance in
our super funds…
Younger Australians are more likely to only have the default level of life insurance in their super fund than their older counterparts.
Younger Australians are more likely to only have the default level of life insurance in their super fund than their older counterparts.
… automatic inclusion is the
main reason why.
Default cover remains the dominant
insurance option
Many Australians, particularly the
young and healthy, believe they won’t
be affected by serious illness or
injury*.
*Source: Institute of Actuaries 2011
One in six male workers aged 35-65 will likely suffer a disability which leaves them unable to work for six months or more*.
One in six male workers aged 35-65 will likely suffer a disability which leaves them unable to work for six months or more*.
We’re indestructible…
Key milestone insurance drivers
33%
10% 18%
26% 17%
24%
16%14%19%
0% 5% 10% 15% 20% 25% 30% 35%
Percentage of Australians
18-24 Encouragement from family/friends
25-34 Birth of a child
35-64 Mortgage
Why we take out extra cover
Most Australians take out extra cover, in their super fund, when they get a mortgage.
Most Australians take out extra cover, in their super fund, when they get a mortgage.
Generational key drivers
The underinsurance problem,
in part, stems from a
lack of education
about the importance of having the
appropriate level of cover in place*.
Education is key
Remember, the average advised client is insured for $308,212 …
Non-advised clients have just $99,954*. Remember, the average advised client is insured for $308,212 …
Non-advised clients have just $99,954*.
Less than half of
Australians have ever
sought financial advice…
What… I have insurance in my super?
32%
58%
10%
0% 10% 20% 30% 40% 50% 60% 70%
Aware Not aware Can't say
Percentage of Australians
Awareness of cover in super National figures
Many Australians don’t know they have life insurance through their super fund…
Many Australians don’t know they have life insurance through their super fund…
Many believe it’s too expensive …
… but for less than
$30 a month…
… a non-smoking
man aged 35
can get $500,000
life cover.
Why Australians only hold minimal cover
We’re concerned about cost
26% 21%
26% 46%
56% 50%
40% 45%
0% 10% 20% 30% 40% 50% 60%
Percentage of Australians
Why we don’t get extra cover
62% of
Australians
are most
concerned about
covering everyday
expenses…
… 30% are
worried about
funding
retirement.
What kind of retirement would you have if…
… you
couldn’t work
again due to
disability… ?
The consequences of holding minimal cover
56%
40%
70%
17%
31%
17%
65%
0% 10% 20% 30% 40% 50% 60% 70% 80%
Percentage of Australians
How families would support themselves
National figures
More than half of Australians
would have to rely on Centrelink
if a family member suffered a
terminal illness or passed away.
Average weekly income for
working Australians $1,322
Average weekly Centrelink
Disability Support Pension …
Less than $350
Many Australians would be out of pocket
Summary of findings
Only half of Australians have life and TPD insurance
58% don’t know what insurance they may have through super
Just 42% of Australians have ever sought financial advice
Australians believe they can’t afford insurance, it’s not a priority and they
have enough through super
Mortgage the main driver to get insurance additional to default level in super
43% of Australians get cover outside super directly from providers
More than half would have to rely on Centrelink if a family member suffered
a terminal illness or died.
So ask yourself…
Do I have insurance?
Do I have enough cover to insure my income and lifestyle if
required?
When did I last ask my adviser to review my insurance
needs?
Who do I have my insurance with?
Do I have insurance in super?
These findings are based on an online study conducted by
Newspoll for CommInsure during November 2011.
1220 adults aged 18-64 were surveyed nationally.
Important information: This information was prepared by The Colonial Mutual Life Assurance Society Limited ABN 12 004 021 809 AFSL 235035 (CMLA) a wholly owned but non-guaranteed subsidiary of the Commonwealth Bank of Australia ABN 48 123 123 124 AFSL 234945. The
information and examples are of a general nature only and have been prepared without considering your objectives, financial situation or needs and before acting on it, you should consider its appropriateness to your circumstances. Advisers and their clients should refer to the relevant life
company documents for further clarification. CommInsure is a registered business name of CMLA.
