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Many Australians have poor understanding of insurance risks

An international survey commissioned by Zurich has found that Australians tend to underestimate the risk of death, illness or disability compared to consumers in other developed countries and this is reflected in low levels of life insurance cover.

The Oxford University study found that 47% of Australians believed they had a probability of 10% or less of experiencing income loss due to sickness or injury.  Only 27% had protected their income and of those without income protection cover only 37% said they would consider buying it which was the lowest figure from all the 11 nations surveyed.

The survey also found that Australians had high expectations of Government support to replace lost income which Zurich stated was “..at odds with reality, especially for higher income earners and especially at a time when the government is tightening eligibility for the disability support pension in an attempt to reign in its $17 billion annual cost”.

Tim Bailey, Chief Executive of Zurich Life and Investments, said “Australians’ optimism about their state of health and the likelihood of death or disablement is not matched by the actual probability of injury or illness, which makes our relatively low levels of insurance protection even more problematic.”

The study found a strong relationship between financial literacy and the levels of ownership of death and disablement cover.  “The more financially literate countries were also those which had a more realistic understanding of the risks they faced, the mechanisms available to protect against those risks, and the cost”, said Bailey.

To help consumers understand their insurance risks better Insurance Watch provides extensive help via videos, calculators, case studies, online quote comparisons, customer reviews, product descriptions and tips and traps. Find out more.

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