Australia has one of the lowest life insurance penetration rates in the world, according to a survey by Zurich and the University of Oxford.
The rate for income protection in Australia is 27%, and 25% for life insurance.
These figures compare with 63% for income protection in Malaysia and 48% for life cover in Hong Kong – the leading penetration rates.
The global average penetration rate for income protection is 33%, with life insurance on 32%.
The results are based on a survey of 11,584 people in 11 countries.
Zurich Australia Life & Investments CEO Tim Bailey says the study shows protection gaps are a growing challenge.
“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,” he said. “This makes our relatively low levels of insurance protection even more problematic.”
Respondents were also questioned about their knowledge of life insurance and the risks of illness or disability.
In Australia only 15% say they have good knowledge of life cover, while 47% know nothing about it.
Malaysia has the highest percentage (41%) of people professing good knowledge.
A number of countries recorded more than half of respondents conceding poor knowledge, including Germany, Spain, the UK and Switzerland.
The global average was 22% good knowledge, 40% no knowledge.
Mr Bailey says the more financially literate populations also show more realistic understanding of the risks they face. “Those same countries were those where ownership of death and disablement cover were the highest.”
Among people without income protection, more than half would consider buying it – mainly because they understand other income would be insufficient to meet their needs after suffering a disability.
Premiums play a decisive role. A third of respondents are willing to spend 5-9% of their income on income protection, while only one in five would spend more than 10%.
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Source: InsuranceNEWS
