Australian workers need more ways to get financial advice to secure their future as they struggle under the pressure of intense cost of living increases and mental health challenges, according to a new landmark report.

The inaugural State of Australia’s Safety Net report looks into the lives of more than 5000 Australian workers and shows the financial advice needs of young people (18-34 years), women and those in their mid-career (35-54 years) are not being met.

The research, commissioned by the Council of Australian Life Insurers (CALI), investigates the link between life insurance and the personal and financial wellbeing of Australian workers.

“This report shows that rising cost of living, increasing mental health challenges and global economic shocks are putting intense pressure on Australians. They need someone to talk to about their financial future now more than ever,” said CALI CEO Christine Cupitt.

More than two-thirds of Australian workers are concerned that cost of living pressures will impact their ability to afford life insurance in the future.

“Australia’s safety nets are stretched far too thin, and people are increasingly worried about falling through the cracks. Life insurers have a critical role to play to ensure that doesn’t happen,” said Ms Cupitt.

The research was conducted independently by agency 89 Degrees East and led by one of Australia’s most respected social researchers, Dr Rebecca Huntley.

“Our findings show that most Australians, regardless of their age, aspire to be more financially resilient, and this is only becoming more important for them in a cost of living crisis,” said Dr Huntley.

“Higher living costs and the uncertain economic environment have led to increased stress levels and concern about mental health in our community,” she said.

“People know that mental health challenges can have a lasting impact on their personal finances due to time off work and the cost of accessing treatment and support.”

Life insurers are the largest provider of financial support for people experiencing mental health concerns, second only to the Federal Government.

Almost 90 per cent of Australians think it’s important that they’re able to access financial support through their life insurer in the event of mental health challenges that mean they’re unable to work. Despite this, only a third would turn to their life insurer for help in this situation. Most workers are more likely to ask family and friends for help or seek government assistance payments instead.

“This report highlights that Australia’s life insurers provide a fundamental safety net and pathway for people to secure their future, no matter what happens throughout their lifetime,” said Ms Cupitt.

Last year, more than 91,000 Australians or their loves ones received more than $12bn in financial support from life insurers. Even so, there remains a growing underinsurance problem that is leaving more than 3 million people* with inadequate protection when times get tough.

“We have an advice accessibility crisis in this country. In the past three months alone, almost a third of Australians considered seeking financial advice on life insurance, but just 8 per cent actually received it,” she said.

The report highlights the critical need for the passage of tranche two of the Federal Government’s Delivering Better Financial Outcomes legislation, which would allow life insurers to provide simple advice on their own products when customers ask them to.

“This report shows that young Australians, mid-career workers and women in particular want to learn more about what’s out there to help protect them. They’re under pressure at work and at home, they’re worried about the cost of living, and they’re intrigued by the possibility of safety nets to increase their financial resilience and overall wellbeing.”

Read the report

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*Deloitte (previously Rice Warner), Underinsurance in Australia, 2020