Australians among most under-insured and financially illiterate in the world
Recent research by Zurich has found that Australia is one of the most under-insured and financially illiterate nations in the developed world.
Zurich in partnership with Oxford University developed their 2016 Income Protection Gap report based on surveying 11,000 individuals across 11 selected countries. The findings revealed that Australians are considered under-insured, financially illiterate, over-confident and unrealistic regarding income protection costs and government support.
The survey found just 27 per cent of Australians have insurance against a serious illness or disability and 25 per cent are insured against premature death. Australians are also poor savers, and the least interested in having income protection, the report states.
The most insured country was Hong Kong, with 62 per cent of citizens having insurance against a serious illness or disability and 48 per cent being insured against premature death. The lowest scoring country was Brazil, with 22 per cent of people having insurance against a serious illness or disability and 19 per cent being insured for premature death.
The report also assessed individuals’ perception of the risk of losing income due to a disability and found that while Australians have an extremely ‘bullet proof’ attitude, nearly half of all Aussies surveyed have experienced income loss in their working life due to a serious illness.
At the same time, 29 per cent of Australians said they had less than one month’s savings cover to use in case of a serious illness or disability while 65 per cent had less than six months.
Australia was also one of the lowest scoring countries for financial literacy concerning insurance, with just 19 per cent of Australians saying they had ‘good to very good knowledge’ of disability insurance.
Meanwhile, the most financially literate country was Malaysia, with 59 per cent of Malaysian respondents saying they had ‘good to very good knowledge’ of disability insurance.
Zurich Australia’s chief executive, life and investments, Tim Bailey said “Financial advisers have got a critical role to play as insurers but there also needs to be a broader involvement from other key industry parties that helps us to move forward from a financial literacy [perspective],” adding that insurers can also address this question by making changes to costs and covers. “How do we, as an industry, ensure that we can offer simpler covers which are easier to understand and maybe less expensive for consumers?
