75% of Aussies don't understand group cover: MLC LifeBY JAMIE WILLIAMSON | THURSDAY, 28 APR 2022 12:37PM
Read more: MLC Life Insurance, Mark Puli
Superannuation funds must do a better job of communicating the value of group insurance, with research revealing just 25% of Australians understand what they're covered for, and many may not be adequately covered following recent reforms.
MLC Life Insurance recently surveyed 1500 people and found that just a quarter claimed to understand what they're covered for under the life insurance offered through their superannuation while even less (21%) know what their premiums are.
The research highlights the low engagement levels with life insurance when compared to other financial products. According to the survey, just 42% of respondents said they understand their policy and have reviewed it more than once. This figure is incredibly low when compared to everyday banking (87%), general insurance (78%) and long-term loans (73%).
This is despite 83% of respondents saying life insurance is important and 71% expressing a desire to ensure their cover is right for them. Meanwhile, 32% said they don't want to pay for anything they don't need but only 23% have made the effort to modify their level of cover. Of those that have modified their cover, 58% said they're more likely to stay with their fund; 60% of total respondents said having more personalised cover would likely increase their loyalty to their fund too.
About 80% of respondents said they'd be happy for their super fund to ask more questions about their personal circumstances and 59% would like their fund to provide an online calculator to help them make their own insurance choices.
Those aged 18-34 were the least engaged, while those over the age of 65 were most engaged. Men are also more engaged than women, according to the study.
On the topic of reforms, MLC Life found that about 60% of super fund members - largely younger members - have never heard of the stapling reforms introduced last year, meaning their cover may be at risk.
"This poses a potential risk for individuals who change jobs, in particular, those not covered by default (under 25s and those with low balances) and people who are stapled to a fund but move into a role that's riskier to their health and safety," the research states.
"There's a need for superannuation funds to advise and guide members responsibly through their insurance needs around what changes in employment mean in terms of appropriate level of cover."
Commenting on the findings, MLC Life chief group insurance officer Mark Puli said it's disappointing so few are aware of stapling.
"We understand and support the intent of these changes - to reduce the number of Australians with multiple superannuation accounts - but in practice it means people won't have the right cover for their circumstances," Puli said.
"The average Australian changes jobs 12 times throughout their lifetime. In that time, they may get married, have kids, buy a home, and take on more debt. It's imperative that members have the right cover for their needs and if they aren't prompted to review it, they simply won't."
MLC Life said there is a clear education and knowledge gap that needs to be addressed and an improvement in understanding and engagement is particularly necessary.
"The findings highlight a clear opportunity to close this fundamental knowledge gap by better educating people about their cover. This will help ensure that people are more appropriately covered for their needs," MLC Life said.
"Superannuation funds are very well placed to act as a key player in guiding, supporting, and driving engagement with members on their choices of insurance. Members are very open to their superannuation fund collecting more information on them so that they can make better recommendations in relation to level of cover and products."
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