You’ve just got a payrise. Do you pump the extra cash into wealth protection or splurge it all eating out? No prizes for guessing Australia’s answer to that question.
According to a TAL survey, Aussies would prefer to spend extra income dining out rather than taking out or upgrading insurance to protect their lifestyle and financial commitments.
That’s not to say that Australians are a frivolous lot. When asked what they would spend a 10% payrise on, building up savings (58%), paying off bills (30%), paying off the mortgage (28%) and cutting credit card and loan debts (25%) took the top four spots amongst respondents.
However, while Aussies seem to have grasped the basic financial principle of reducing debts and save more, wealth protection hardly gets a look in. Only 5% of respondents would opt to take out/ or upgrade personal insurance (income, disability, life and illness), and only 4% would take out another form of insurance.
These results are largely in line with Lifewise/NATSEM findings that 95% of Australians have inadequate insurance in the event they could not earn an income.
“We undertook this survey as part of our efforts to continue to better understand Australians’ perceptions and behaviour towards life insurance and societal changes. It is clear that that the deleveraging taking place since the GFC is still a priority for consumers.
“We know most people don’t have enough insurance in place to meet their commitments and maintain their and their family’s lifestyle should their ability to earn an income stop. These figures reveal that most people would rather do almost anything other than start life insurance or enhance what is probably inadequate cover.”
So, what can you do to improve the situation? Minto suggested that “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.”