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Consumers lacking basic life insurance literacy
Consumers lack awareness on the details of their employer's default super funds and how much life insurance they offer, according to the general manager of an online financial education website.
Fiona Parker from Wealth Know How believes that when people are dealing with their insurance issues, they are unaware of the insurance complexities, and can quite often be over-insured or under-insured.
"We often see a situation where people are over-insured because they haven't looked at all of those mixes," Parker said.
"They'll go in and take out an insurance without proper financial advice of say half a million dollars' life insurance, and $1 million total and permanent disability insurance and part of those might sit within your super or sit within your employer insurance anyway."
She added the lack of awareness stems from the fact that people just do not know where to look.
"They're not educated in their wealth creation and financial advice space. They don't necessarily know whether there's insurance in their super scheme."
The comments correlate with research conducted by Zurich Financial Services earlier this year, which found just over half of the 394 people surveyed were aware they had life cover through their superannuation fund, exhibiting lack of knowledge rather than lack of cover.
Parker said consumers should have basic understanding of insurance within their super even before they seek financial advice so that advisers can focus on planning investment strategies rather than spending time going through the basics.
"Financial planners are generally well-educated people. If they're doing the basic level of trying to bring consumer education to the baseline, they're not doing as much of a service of what they can do when they can also talk about investment advice," Parker said.
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