Life insurers looking to make sales in Australia are facing some stiff headwinds, a new report finds.
Conducted by Southbank, Australia-based Lifebroker, the survey of 1,000 adults shows that Australians are significantly underinsured when it comes to life and income protection insurance.
The numbers attributed the tendency to underinsure to several factors including a suspicion of an insurer’s penchant to pay claims and widespread confusion over the tenets of life insurance.
“According to the survey, 67% of respondents said they believe insurers will use loopholes to avoid payouts,” the report states. “A further 58% of respondents incorrectly believed premiums for life insurance products were much higher than car and home insurance, contributing further to a lack of trust that consumers feel toward life insurance products and the institutions that sell these products.”
Thus, the industry must endeavor to increase knowledge and dispel misconceptions in order to remove barriers to investing in life and income protection insurance, the report concludes. “This research highlights the need to continue raising awareness of the unacknowledged and hidden costs of long term incapacity from illness or injury and sudden death. This will increase awareness of the underinsurance issue and increase consideration of life and income insurance.”
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