Australians need to think more carefully about life insurance

Date: Sep 16, 2013

The subject of life insurance was broached at the AIA Australia Group Insurance Summit, which was recently held in Melbourne.

Those in attendance identified "Australia's 'greying' population" and "a continuing lack of awareness about the importance of insurance" as the two factors that are having the greatest impact on the industry.

Approximately 70 per cent of them cited "consumer uncertainty about the need for life insurance" as being a cause for concern.

In addition to this, Australians who actually have life insurance aren't entirely sure how it works.

The superannuation and insurance professionals at the AIA Australia Group Insurance Summit said that many people accidentally revoke life insurance cover by consolidating their accounts or changing to self-managed super funds (SMSFs).

The industry discussed ways it could make life insurance more attractive to Australians, and decided that creating new products and streamlining the claims process would be a step in the right direction.

Out of those who attended, 23 per cent believed the former remedy would be the most successful, while 42 per cent thought the latter would encourage people to take out adequate cover.

Damien Mu, AIA Australia General Manager (Life Insurance), said in a September 16 statement that life expectancy in Australia is continuing to climb. It is currently the fourth highest in the entire world.

"By 2036 it is predicted that around 1.1 million Australians will be aged 85 years or over," said Mr Mu.

He called this a "huge demographic shift," and said that Australia needs to join forces to "respond to this challenge".

"We have to work together to ensure that Australians not only have life insurance, but that it is at an adequate level for their future needs," announced Mr Mu.

If you are currently in the process of organising your estate, you should be thinking about your life insurance options.

It is common to focus all of your attention on creating a will. While this is an important part of estate planning, it's not the only part.

You should also spare a thought for superannuation nominations, powers of attorney and, of course, life insurance.

If the issues raised at the AIA Australia Group Insurance Summit are attended to, and the planned solutions are acted upon, you may soon have better access to more affordable and adequate life insurance cover.

You may want to get in touch with the team at Craddock Murray Neumann and discuss your life insurance and estate planning needs.