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Low understanding of life insurance
More than one-third of Australians with life insurance have ‘a vague idea' and 18 per cent have ‘no idea' what level of cover is provided in their superannuation, according to a survey.
Life insurance adviser, iSelect, found while one-third of Australians had some form of life insurance, half of those were only covered by what was included within their super policy.
iSelect said many Australians did not understand the level of life insurance within their super policy and were not confident it would meet their family's needs in the event of something unfortunate happening.
The research found of those who only had life insurance in their super, 43 per cent were confident it would provide them with sufficient cover in the event of serious illness, disability, or death.
iSelect spokesperson, Laura Crowden said the lack of understanding and time taken to learn about life insurance in super was concerning.
"Talking about you or a loved one passing away or falling ill is a difficult topic to broach and for that reason many people tend to avoid discussing what impact it would have on their family's (or their own) financial security," she said.
"It is because people don't like talking about it that there is a lot of confusion when it comes to life insurance."
The research found that cost was not the only factor preventing people from taking out additional life insurance cover.
Of those who did not feel their super sufficiently met their life insurance needs, 26 per cent said they could not afford it and one-in-five said they had not got around to it.
"Many people assume that life insurance only refers to life cover, which provides a lump sum payment in the event of death, but life insurance is also about protecting your family's lifestyle in a range of unfortunate circumstances including illness or disability," Crowden said.
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