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As part of Savvy’s ongoing research into Australia’s finances and economics, our latest survey takes a look at life insurance coverage among the population.
- 44% of Australians do not have any life insurance and have no intention of taking out a policy
- 46% of women vs 42% of men say they don’t have and don’t want life insurance
- 29% of Australians have life insurance policies through their superannuation fund
- Three in five (59%) say that death cover is the most important aspect of a life insurance policy
A recent national representative survey (n=1000) into cost-of-living pressures by Savvy has revealed that a staggering 44% of Australians don’t have any life insurance – and have no plans to take out a policy in the future.
46% of women and 42% of men say they don’t have – and don’t want – a life insurance policy. That leaves a little under a third with basic life insurance provided through their superannuation fund (33%) and only 11% who have taken out a life insurance policy through a dedicated provider.
13% of those surveyed said that they don’t have life insurance as of yet but are considering buying a policy.
According to the Financial Services Council Australia’s Life Underinsurance Gap: Research Report, there are an estimated 1 million Australians underinsured for death/Total & Permanent Disability (TPD) and about 3.4 million underinsured for income protection insurance.
| What best describes your situation as it relates to life insurance? | Total | Male | Female | Other |
|---|---|---|---|---|
| Total | 1000 | 502 | 489 | 9 |
| I already have life insurance through my Superannuation fund | 292 (29%) | 146 (29%) | 143 (29%) | 3 (33%) |
| I have life insurance through my self-managed super fund (SMSF) | 29 (3%) | 20 (4%) | 9 (2%) | - |
| I have life insurance through a dedicated policy / provider | 108 (11%) | 63 (13%) | 44 (9%) | 1 (11%) |
| I don’t have life insurance but am considering taking out a policy | 130 (13%) | 62 (12%) | 67 (14%) | 1 (11%) |
| I don’t have life insurance and don’t intend to get it | 441 (44%) | 211 (42%) | 211 (46%) | 4 (44%) |
Savvy, Life Insurance Survey, April 2023 (n=1000)
| What features do you consider important with a life insurance policy? | Total | Male | Female | Other |
|---|---|---|---|---|
| Total Respondents | 1000 | 502 | 489 | 9 |
| Death cover (a beneficiary receives the payment upon your death) | 587 (59%) | 289 (58%) | 293 (60%) | 5 (56%) |
| Trauma & Accident | 419 (42%) | 184 (37%) | 233 (48%) | 2 (22%) |
| Income Protection Insurance | 445 (44%) | 200 (40%) | 242 (49%) | 3 (33%) |
| Total and Permanent Disability (TPD) Insurance | 443 (44%) | 204 (41%) | 236 (48%) | 3 (33%) |
| Other | 12 (1%) | 4 (1%) | 8 (2%) | - |
| None of the above | 244 (24%) | 131 (26%) | 109 (22%) | 4 (44%) |
(Respondents could select up to three answers)
Savvy, Life Insurance Survey, April 2023 (n=1000)
What people value with life insurance
As far as what life insurance policies should cover, 59% of Australians agree that it should cover death (i.e. a beneficiary receives a payment upon the policy holder’s death) with 67% of 35-44 year olds citing it as the most important component of a life insurance policy.
42% said that trauma and accident cover is important, with 44% of respondents agreeing that income protection insurance and TPD insurance are important features. 48% of women said that trauma and accident insurance is important, compared with 37% of men.
Savvy spokesperson; Bill Tsouvalas
The fact that so many Australians seem to understand the value of life insurance yet don’t have a policy is alarming.
“Life insurance in all its forms, be it death cover, income protection, or total and permanent disability is not only about protecting yourself but protecting your family and community for the worst,” says Adrian Edlington, spokesperson for Savvy.
“With costs of living rising and inflation still biting, even a temporary shortfall in income could prove disastrous for many families. Though communities would love to help someone when they’re able to, the fact is that few communities can afford to at the moment. That’s why people should find a good life insurance premium that covers them adequately without spending too much.
“But the ultimate benefit is this – peace of mind.”
How to find the best life insurance
Did you know that the Financial Services Council of Australia estimates that 1 million Australians underinsured for death/Total & Permanent Disability (TPD), and about 3.4 million are underinsured for income protection insurance?
According to our own survey, a whopping 44% of Australians don’t have any form of life insurance – and they don’t even plan to get any!
Life insurance is a vital type of insurance, especially for a young or established family. A sudden death, accident, or job loss could throw one’s finances into chaos, especially if there’s a sudden loss of income and rent or mortgages are due, bills need to be paid, and children need to be looked after.
What life insurance can include
Many people think that life insurance is just death cover – an insurance that pays out a lump sum to a chosen beneficiary upon the policyholder’s accidental death.
However, life insurance can also include other policies.
The most common ones are trauma and accident cover, Total and Permanent Disability (TPD), income protection insurance, and funeral cover.
Trauma and accident cover pays you if you are diagnosed with a specific illness or suffer an accident where you are injured and are unable to work. Note that this does not treat psychological conditions.
TPD insurance gives you a lump sum to cover hospital costs and other debts after suffering an injury so severe, you are permanently unable to work.
Income protection insurance covers you in the event of being unable to work due to illness, injury, or retrenchment. Income protection usually pays up to 70% of your income to cover expenses.
Funeral cover is as the name implies – coverage for sudden funeral expenses.
Do you need life insurance?
The short answer – most likely, yes.
Do you provide financial support for any family members or dependants? Life insurance ensures that your dependants will be supported financially if something were to happen to you, regardless of whether they are your children, a spouse, or even your elderly or infirm parents.
Are you self-employed or the primary wage earner? To guarantee that your company survives any accident, you might want to take precautions. To ensure that your company may continue in the event of your death, you can pick a business-owned life insurance policy with a disability insurance that names the company as the beneficiary.
Alternatively, if you work in a hazardous environment, you might want to think about purchasing disability insurance that will continue to pay you a salary in the event that an accident prevents you from working.
Doesn’t my superannuation have life insurance?
Some superannuation funds do include a life insurance option – however, you need to know what amount it covers, whether it covers TPD, trauma, or income protection, and for how much. In many cases, life insurance through super is not enough.
How to choose the right kind of life insurance
To get the best kind of life insurance, you need to balance the monthly premium with the benefit you intend to receive. There is little point in paying high monthly premiums for millions of dollars of payments if you do not need to cover that amount of debt or expenses.
You need to ask a life insurance provider what the waiting periods are and what they exclude as part of the coverage – what constitutes “an accident” or “total disability” for example. You may also want to see if there are any additional features you can use, such as combining other types of insurance (e.g. car or home insurance) for an overall discount.
Furthermore, you should also look online for ratings on life insurance companies to see if their claims process is easy to follow and whether they settle in a quick and efficient way.
Before you purchase life insurance, you should shop around and do your own research. Tapping into the knowledge and resources of a broker can help find many different premiums and advise you on what level of coverage and features you need. Remember to get professional financial advice before proceeding with any major purchase.
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