“How much life insurance do I need?” It’s a question that many Aussies are willing to ask, but findings from Australia’s largest life insurer, TAL, indicates that women are far less likely to follow through with the recommendations.
According to TAL’s research, only 47% of women hold some form of financial protection, compared to 57% of men. The TAL Galaxy poll found that women significantly lag behind men in each of the four forms of life insurance, life, disability, income insurance and critical illness cover.
According to TAL Group CEO Jim Minto, these levels of coverage are way too low. “Life and related insurance is essential for protecting hard earned assets and safeguarding future lifestyle and family commitments – for women every bit as much as men,” he said. “Having the right protection in place for each partner in a household recognises that each member of a household plays an important role in supporting both essential daily needs and longer term aspirations. It’s time for us as a society and as individuals to place appropriate value on the contribution women make, whether at work, at home or both – and protect it accordingly.”
Q&A with TAL: Life Insurance For Women
CANSTAR caught up with Mr Minto for some further information on low coverage rates.
Q: In your experience, why do you think it is that women are less likely to have appropriate levels of insurance cover in place?
A: We know that women account for most of the stay at home workforce and either do not have financial protection from life insurance or have very little. We as a society need to redress this problem and one initiative TAL takes is to sponsor the Female Excellence in Advice Award every year to help increase female participation in the financial advice profession which in turn can help increase financial wealth and protection for women through the provision of advice. We have also been a sponsor and supporter of Money Smart Week to help increases community awareness. And our consumer poll results and stories like this help to generate awareness.
Historically it has been the main breadwinner who has had financial protection but all breadwinners and stay at home parents need to protect the “work” they do because there is a cost of finding assistance to help out if they are unable to carry on with their domestic chores.
Q: Overall levels of insurance (male and female) are still lower than they ideally should be. Is it something that gets put in the “too hard” basket?
A: Yes, overall levels of protection are too low which has been well documented. Quality advice and improved insurance coverage across the community are essential to the wellbeing of all Australians. According to the Rice Warner ‘Underinsurance in Australia 2013’ report, 94% of the working population are insured for term life, while 68% are covered for TPD and 37% for income protection.
Alarmingly, the average level of cover within each product type is highly insufficient. The average median insurance amount as a percentage of need is reported as 64% of basic life cover, 42% for income replacement life cover 16% of income replacement cover per annum and merely 14 % of TPD cover.
And research by KPMG for the FSC’s recent federal budget submission indicated that the aggregate underinsurance in long-term disability cover is around $304 billion. It also indicated that with every $1 increase in private disability insurance, there would be a 50 cent savings in disability support pensions with most of the savings coming from the 45-64 age group (working population). This would work out to be savings of $340 million each year with an aggregate amount of approximately $2.5 billion at the 10 year mark.
Government can help incentivise people to obtain protection and reduce the exposure to taxpayers the significant costs of underinsurance through the payment of social security benefits and many other supports.
Q: What are some common areas of need that men and women can typically forget to take into account when deciding how much insurance cover they require?
A: An adviser is best placed to assist with this process to ensure adequate cover is secured but for those who prefer to self-select they need to account for all of their expenses, both at the present and into the future, on the basis they couldn’t work again and can’t earn an income. So school fees and everything to do with the cost of children and even things like holidays and achieving future family dreams, like taking up certain hobbies, need to be calculated.
TAL is a CANSTAR award-winning life insurer; you can read CANSTAR’s most recent life insurance star ratings report here.