Research: a million more Australians could have life insurance
/The Financial Services Council (FSC) has published new research that shows simplified financial advice and a scalable advice model for life insurance would see a million more Australians with life cover.
If the Quality of Advice Review recommends the implementation of a scaled advice model and other reforms to make the advice process simpler, a 12 per cent increase in life insurance would be the result.
The researcher’s task was to analyse underinsurance in Australia by modelling three scenarios, including one whereby the FSC’s advice framework was used with a simpler advice model for accessing cover that goes further than default cover.
The proposals for reforms to the advice framework are set to reduce the cost of providing advice by nearly $2,000, with commissions in place, so people can access life insurance advice at times they can’t afford the upfront cost.
Recommendations by the FSC include removing Statements of Advice for a simpler Letter of Advice, breaking the chains between financial products and advice, and removing safe harbour steps for complying with the Best Interests Duty.
Some findings from the study include:
About 15 million Australians are currently insured, paying $17.3 billion in group life and individual premiums annually
There are about 1 million Australians estimated to be underinsured for death and total and permanent disability, with 3.4 million under insured for income protection cover
Commissions should remain an option on advised life insurance
