Life insurance australia - Life assurance australia

With over 40 years of experience in Australia, AIA Australia Limited is one of the country’s leading independent life insurance specialists.

AIA Australia offers a wide range of insurance products, including:

1. Life Cover, to help protect your family home and livelihood by settling unresolved mortgage obligations.
2. Crisis Recovery, which helps bear the costs involved in recovering from crisis events such as cancer, heart attack and stroke.
3. Income Protection, which provides you with an income stream when you are unable to earn one due to a recent disability or severe illness.
4. Business Expenses, devised to cover self-employed people who need to ensure that their business’s fixed expenses will continue to be paid if they cannot work having recently become disabled or severely ill.

Fast facts about AIA Australia:

• Insures more than 2.5 million Australians
• Is Australia’s fastest growing life insurer
• Paid out more than $2.2m in claims for every working day in 2012
• Has an award winning product able to be tailored to your needs

AIA Australia is part of the AIA Group, a life insurance market leader throughout the Asia Pacific region with more 90 years of experience.

Bundling it up

Superannuation life insurance works like so – when you sign up for superannuation, your fund will provide you with an option to take out a life insurance policy, paid for out of your superannuation savings. For many, this is seen as advantage, as you don’t see the monthly fee come out of your income.

Unfortunately, there are real problems with this system, which I will detail below.

Terrible for teens

Teenagers, who typically only work casual or part time jobs, do not have much income flowing into their super. This is understandable; 9% of a casual, $200 a week income is going to be much less than the same percentage of a full time wage.

However, this is not reflected in the super fund’s life insurance fees, which are generally standardised for everyone. As a result, teenagers and those working fewer hours see a greater percentage of their funds lost, funnelled out to pay for life insurance.

But this is not the only issue with having life insurance bundled in with superannuation. There are a host of other problems, starting from the moment you sign your policy.

Opt out, not in

At most superannuation providers, when you take out your policy you automatically take out a life insurance package as well. If you don’t want to have it, you have to tick a box to ‘opt out’ of the life insurance policy.

This practice is misleading. At the very least, life insurance should be offered on an ‘opt in’ basis, forcing people to choose it, rather than allowing them to sign up by omission.

Joining a superannuation provider can be complex, and though it’s important to read all the fine print, many people skim over sections that they don’t directly have to answer. Having an automatic signup for life insurance is unfair.

Giving medicals a bad name

The Age article points out that when taking out individual life insurance, as opposed to life insurance as part of your superannuation, “a medical examination may be required. With large super funds there is usually automatic acceptance.”

To suggest that automatic acceptance is a benefit is simply wrong, and represents a complete misunderstanding of the reasons for medical examinations.

Life insurance companies require you to have medical exams so they know who you are and what your health is like. In effect, they are assessing you before they take your money. If they find anything they deem too risky to cover, they will notify you of that. That way you can make an informed decision. By having a medical exam, you know exactly what you’re covered for.

Automatic acceptance may seem easier at first, but when it comes time to claim, you might find that cover is excluded because of a pre-existing condition.

Losing interest

Buying life insurance through your super fund costs only a small monthly amount. As a result, it can seem like a worthwhile expense. However, when you buy life insurance this way, you are not only losing the amount that is debited out of your account each week; you also lose the interest this accrues. Though this might seem negligible, over the course of the policy, it starts to add up.

By buying an individual policy out of your disposable income, you avoid this problem. The money that goes into your super fund stays there, accruing interest, awaiting your retirement.

Individual policies are simply the better way to go. They provide you with defined cover and can be purchased for a low monthly fee.  

The views expressed are my own and don’t reflect the views of my employer.

Australians know they don’t have enough Insurance Cover

In order to gauge the perception the Australian public holds towards how comprehensive their existing levels of insurance cover are, TAL recently created what they have named the Australian Financial Protection Index. The index provides a score between 0-100 and is based on the type of cover a person has (life, trauma, income protection etc.) and whether they feel that their current levels of cover sufficiently meet their needs.

The average national score for the index created by TAL came in at a low 24.2. This gives a strong indication that the majority of Australians included in the study felt their current levels of cover were not comprehensive enough should they or their partner no longer be able to work.

30% of participants scored 0 as they currently hold no personal insurance, with only 8% achieving a score of 70 or above.

Jim Minto, managing director at TAL was surprised by the results considering the growth in life insurance cover through superannuation over recent years.

As a Broker it is vital to remain committed to informing your clients of all the insurance options available to them. It is imperative for you to spend time with your clients to ensure they fully understand the entire spectrum of benefits that having personal insurance may provide.

Whilst the survey developed by TAL provides an interesting insight into the ways in which Australians view their need to gain comprehensive cover, it is important to remain mindful of bombarding the public with statistics and facts that do not really resonate or impact on their daily lives.

Communicating effectively with a client means it’s time to move away from the habit of simply rattling off statistics on health.  In an age where we’re constantly bombarded by statistics and figures, it’s vital to cut through the ether and bring the discussion of cover into a more meaningful context.

Through focusing on things like your client’s house, their child’s education and a desired overall quality of life, the need for comprehensive levels of insurance cover become a much more realistic issue and a more important problem to overcome.

Be wary of simply providing your client with literature or pamphlets and expecting them to understand completely all the benefits that comprehensive life insurance can provide. You’ll find you will have much more success with any prospective client if you take the time to work through the information with them, discussing openly any questions they may have. Ensuring your prospective client understands and is comfortable with everything you have spoken to them about.,

To discuss your current insurance cover or to find out what will best suit your needs, speak with one of Lifebroker’s dedicated consultants today. 

Australia Lags Region in Risk Cover

One of the survey’s most striking findings was that, when compared to people in other countries, Australians are much less likely to protect themselves with insurance. Only 35% of Australians say that they carry life insurance, compared with 62% of respondents in Indonesia, 65% in Korea and 80% in Singapore and India.

A similar situation applies to other forms of risk insurance. Only 11% of Australians carry disability cover, a proportion that is half that of the region as a whole. Cover for critical illness is reported at 22% for Australia and 30% for the region overall.

David Mouille, Citibank’s Head of Retail Banking, attributed some of that lack of cover to Australia’s universal health care, social security and superannuation systems, which may leave Australians feeling less mindful of the financial risks they face. "The amount of personal insurance cover people take out is highly correlated to how vulnerable they feel," Mouille said.

The survey found that 41% of Australians thought that they and their families had sufficient insurance in place, but that response was balanced by the 42% who acknowledged that they had no insurance at all.

On the other hand, Australians are hardly optimistic about their finances, with 32%, one of the highest regional scores, saying they were worried about their financial futures and 30% saying that a job loss would force them to exhaust their savings in less than a month.

"It's concerning that many Australians continue to live on month-to-month income, particularly when they are acutely aware of their increasing cost of living and seek a secure financial future for themselves and their families,” Mouille said.

In general, Australia recorded a Fin-Q score of 48.5 on a scale that goes to 100, a drop of 1.4 points since 2011 and the second lowest score in a region with an average score of 53.2. Only 22% of Australians reported that they had formal financial plans in place, 39% had no confidence in the adequacy of their retirement plans and 44% either did not know their retirement needs or had yet to start a plan.

Insurance a Low Priority for Australians

According to TAL, which derived the results from a survey of 1,260 Australians between the ages of 18 and 69, most people would opt to do “almost anything” with additional money before they would consider devoting it to increased financial protection.

On a national basis, 58% of survey respondents indicated that they would build up their savings, while 30% would pay off bills, 28% would pay off mortgages and 25% would pay off credit cards and other personal debt. According to those figures, “deleveraging” remains a priority for 85% of people surveyed. “It is clear that that the deleveraging taking place since the GFC is still a priority for consumers,” said TAL CEO Jim Minto, referring to the consequences of the global financial crisis.

In addition to deleveraging, Australians would apply extra funds to holidays, car and technology upgrades, shopping, dining out and additional study before they spent any money on insurance. Only 5% would purchase or upgrade personal insurance, including life, disability, illness and income protection, and 4% would purchase “another type of insurance.”

“We undertook this survey as part of our efforts to continue to better understand Australians’ perceptions and behaviour towards life insurance and societal changes,” Minto said. TAL noted in its announcement of the results that “95% of Australians have inadequate insurance in the event they could not earn an income.”

TAL also provided results on a generational basis. While only 3% of baby boomers - those between the ages of 50 and 69 - would upgrade personal insurance, 9% of those aged 25 to 34 would make that investment. Even for that younger age group, however, deleveraging was a clear priority.

“As an industry, we need to focus on ways of better demonstrating and communicating the value of the forms of life insurance - income protection, permanent disability cover, lump sum upon death and critical illness lump sum,” Minto said.

TAL, which calls itself “Australia’s major specialty life insurer,” commissioned Galaxy Research to perform the online survey.