Minister Shorten: Please read the writing on the wall, lives are worth insuring

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The Association of Financial Advisers (AFA) is again calling on the Minister for Financial Services and Superannuation, Bill Shorten, to become a true advocate of the financial advice industry and focus squarely on the impact of proposed reform on consumers.

Mr Klipin said that endless debate about adviser remuneration is clouding the real issues which are inadequate levels of retirement savings and chronic levels of underinsurance.

“There is now a plethora of research supporting the fact that if commissions are banned, many ordinary Australians will not seek life insurance advice,” Mr Klipin said. “Without advice, Australians are often significantly underinsured or more commonly, and more worryingly, not insured at all.”

Mr Klipin referenced a Zurich consumer survey conducted in December last year, that paints a bleak future in which many ordinary Australians will not be able to afford life insurance advice if commissions are banned.

“All the noise about remuneration has railroaded the real issue which is consumer protection,” Mr Klipin said. “People need financial protection against life’s uncertainties. This summer’s floods and cyclones, last summer’s bushfires all served to highlight that need. Let’s not wait for the next natural disaster to tell us again what we already know – that people’s lives are worth insuring.”

Underinsurance is expected to cost the federal government $1.3 billion over the next 10 years, according to the Lifewise/NATSEM Underinsurance Report released in February 2010.

Mr Klipin said lobby groups with vested interests which attempt to camouflage the issue of underinsurance with an unnecessary debate about adviser remuneration do consumers a great disservice.

“These groups clearly have their own agenda and are working in their own, rather than the consumer’s best interest,” Mr Klipin said. “We are calling on Mr Shorten to work with us to help protect consumers against the financial impact of death or disaster and to resist tinkering with a remuneration system which is not broken.”

The AFA will shortly be undertaking the third tranche of its consumer/adviser research. The research, which is sponsored by AIA and conducted by Coredata/brandmanagement, will investigate why people – including those who use financial advisers and those who don’t – seek life insurance cover.

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