Women still less likely to have adequate insurance coverage than men.

Although Australian women have more employment opportunities and are more educated than ever before,[1] they are still less likely to hold life insurance than men, according to research by Australia’s largest life insurer, TAL, released ahead of International Women’s Day on 8 March.

The research found that 47% of women hold some form of financial protection, compared to 57% of men. Women significantly lag behind men in each of the four forms of life insurance, life, disability, income insurance and critical illness cover[2].

At the same time, 37% of women have spoken specifically about life insurance with a professional advisor, compared to 40% of men[3].

TAL Group CEO Jim Minto said: “On the one hand these results highlight that women are willing to seek professional advice about their finances and life cover needs – a good start in bridging the life insurance gender gap.

“However, despite the take-up of advice and some recent improvements in the gender pay gap in Australia[4], these cover levels are way too low. Life and related insurance is essential for protecting hard earned assets and safeguarding future lifestyle and family commitments – for women every bit as much as men.

“On International Women’s Day, we are celebrating the empowerment of women – be it at home or in the workplace. That makes this the ideal time for all of us to acknowledge women’s economic and social achievements and to ensure they are safeguarded with the right financial protection.”

Recent studies show that 69% of Australian women singularly control their household finances[5] and, where men and women share financial decision making, women commonly manage the regular budget and put spare funds into savings. In other words, women take the lion’s share of responsibility for day-to-day financial management.[6]

“Women are key decision makers and as such are well placed to assess expenses and commitments and work out what is needed to protect their most important assets,” Mr Minto said. “They themselves need protection even if they are not the primary breadwinner.

“Having the right protection in place for each partner in a household recognises that each member of a household plays an important role in supporting both essential daily needs and longer term aspirations. It’s time for us as a society and as individuals to place appropriate value on the contribution women make, whether at work, at home or both – and protect it accordingly.”

TAL, for its part, is a committed advocate for women and was recognised with citations as an Employer of Choice for Gender Equality Citation and the Employer of the Year in the 2014 Money Management Women in Financial Services Awards.

Facts and figures:

Table 1: Type of insurance held (by gender)

Table 2: Amount of people that have spoken with a professional advisor specifically about life insurance (by gender)

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Notes:

[1] http://www.abs.gov.au/AUSSTATS/abs@.nsf/Lookup/4102.0Main+Features30Dec+2012

[2] TAL Galaxy Poll

[3] TAL Galaxy Poll

[4] http://www.tal.com.au/tal-news-centre/media-releases/2014/september/30/raising-the-bar-for-gender-pay-equality

[5] Marketing Mag, 2014, Women control household finances but aren’t feeling love from the big banks: http://www.marketingmag.com.au/news-c/women-control-household-finances-but-arent-feeling-love-from-the-big-banks/

[6] http://www.macquarie.com.au/mgl/au/about-macquarie-group/news/2011/20111206

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Jim Minto

Australians will spend some $791.4 million[1] “in the name of love” before Valentine’s Day – averaging about $86[2] each.

But despite their pledges of undying love, figures from research commissioned by  Australia’s largest life insurer TAL show that most of us are not financially protected as the sentiments ofeverlasting love suggest they should be.

According to TAL’s own latest figures, just 52% of Australians say they have some form of life insurance, with individual types of financial protection held even lower for disability cover (24%), income protection (26%), critical illness (20%) and life (death) insurance (43%).

Other research shows that, should they lose their job, Australians’ savings would only last 3.7 months, down from 4.6 months in 2013[3].

“There are certain occasions that lead us to think about what matters most to us and Valentine’s Day is certainly one of them,” TAL Group CEO Jim Minto said.

“At TAL we’re all in favour of love and romance. Indeed it is love that often spurs people to get the cover they need to safeguard their futures and those of the people closest to them.

“But it’s also hard to ignore the reality that so many people are leaving those futures to chance by either not financially protecting themselves and their loved ones or not ensuring they have adequate protection should they never be able to work again.”

The Financial Services Council says the annual starting cost of life insurance of $500,000 for a 35-year-old male, or $600,000 for a 35-year-old female is $437[4]  around $8.50 a week, although in many cases the costs would be higher.

“This Valentine’s Day we’re simply urging Australians to take a step beyond the cards, flowers, dinners and getaways when they think about their lifelong commitment to their loved one,” Mr Minto said.

“Have a look at your lifestyle, dreams and long term commitments and work out your protection needs. A financial adviser is best placed to do this. TAL alone pays out over $840 million a year in claims which helps people get back on their feet.

“What it comes down to is that you can help make ‘happily ever after’ happen while you remember to celebrate your love at Valentine’s Day.”

Facts and figures:

In sickness and in health 

• One in five men and one in seven women will have had a critical illness before the age of 64[6].
• One in three men and one in four women will be diagnosed with cancer before the age of 75[7].
• Six in ten Australians will be disabled for more than one month during their working life. One in fourwill be disabled for more than three months[8].

For richer, for poorer

• $86 – The average spend per person before Valentine’s Day. 
• $437 – starting annual cost of life insurance of $500,000 for a 35 year-old male and $600,000 for a 35 year-old female, or $1.20 per day
• $58,878 – amount paid on average for each life insurance claim in Australia in 2013.
• $5 billion – Life insurance payments in Australia in 2013[9], which $843 million paid out by TAL alone.

———–

[1] IBISWorld (2014) Lovers Pick Premium this Valentine’s Day, http://www.ibisworld.com.au/media/2014/02/05/lovers-pick-premium-valentines-day/

2 IBISWorld (2014) Lovers Pick Premium this Valentine’s Day, http://www.ibisworld.com.au/media/2014/02/05/lovers-pick-premium-valentines-day/

3 RaboDirect Financial Health Barometer, 2014

4 http://www.fsc.org.au/downloads/file/MediaReleaseFile/2005_0308_fastfacts.pdf

5  IBISWorld (2014) Lovers Pick Premium this Valentine’s Day, http://www.ibisworld.com.au/media/2014/02/05/lovers-pick-premium-valentines-day/

6 Rice Warner Report on Underinsurance in Australia 2011

7 AIHW (2008) Cancer in Australia: an overview 2008, Cancer series no. 46, Cat. no. CAN 42, Canberra

8 Fabrizio, E (2007) Australia & NZ Disability Income Experience www.actuaries.org/IAAHS/Colloquia/Cape_Town/Walker_-_Income_protection.pdf AIHW (2008) Cancer in Australia: an overview 2008, Cancer series no. 46, Cat. no. CAN 42, Canberra

9 Risk Store http://riskinfo.com.au/news/2014/06/17/record-claims-paid-in-2013/

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Jim Minto

Research shows a dramatic difference between the number of Australians who rate the importance of life insurance and the number who have it.

And those without financial protection usually have the most to lose from setbacks such as an accident or illness. This includes retirees and those approaching retirement.

The research was commissioned by Australia’s largest life insurer TAL to help better understand consumer attitudes and behaviours.

More than three-quarters of those surveyed (79%) rate life-related insurance as important or very important.

This contrasts sharply with just 52% of people who say they actually hold some form of life insurance.

Australians were asked to rate the importance of the four main kinds of life insurance in the event their income suddenly stopped. The four life-related insurances are: life cover, critical illness, income protection and total and permanent disability insurance (see note below).

TAL Group CEO Jim Minto said: “The results show that most people rate financial protection as important or very important to have yet only around of half of the population say they actually have some form of protection in place.

“On the one hand it is encouraging that people recognise the vital role of life insurance but the relatively low protection levels reflects just how much work is to be done educating the community about the need to protect themselves and their families.”

Those with a mortgage were the demographic group most likely to recognise the importance of life insurance, but their actual protection levels still lagged.

And while renters also recognise the importance of cover, they have worryingly low levels of protection in place.

“In the event that one’s income stopped suddenly due to accident or illness, what is left to ensure ongoing commitments such as bills, rent or mortgage repayments and schools fees to maintain current lifestyles levels, let alone the dreams of the future,” Mr Minto said.

“And having appropriate protection shouldn’t stop once the mortgage is paid. Having protection such as critical illness insurance, which can finance special treatments, pay everyday bills and for costly rehabilitation and modifications such as wheelchair access remains relevant long after the home is paid off.”

Mr Minto said people should not fall into the trap that because they have one type of insurance that they no longer require any of the other types of cover, because they each serve specific purposes to meet different needs.

“Eight out of ten people with at least one type of life insurance also have a much higher appreciation of the importance of the other types of cover, even though they do not hold those types of protection,” he said.

“Overall, however, it is hard to reconcile that most people understand how important it is to protect their lifestyles and their families’ financial wellbeing, but at the same time are not taking the action they need to do so. We just need to overcome this gap through more education and information.” 

Table 1: How important are the following life-related insurances?

Table 2: Insurances held by housing type

Table 3: Insurance held by income

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Jim Minto

People who consider themselves safe financial risk takers are more likely than those with a high risk appetite and those who avoid risk to have an insurance safety net in place.

This is one of the findings from a nationwide Galaxy Research poll commissioned by Australia’s largest life insurer TAL to study the link between attitudes to financial risk and the take up of life insurance products.

Nationwide, 6% of people call themselves financial risk takers, 61% are “conservative” financial risk taker while 28% of people simply want to avoid all financial risk.

TAL Group CEO Jim Minto said the vast majority of conservative risk takers were much more likely to have some form of financial protection in place through one or more forms of life insurance, while very few high risk avoiders held cover and even fewer risk takers having financial protection.

“This really is quite an interesting result because one might assume that both risk takers and those who avoid financial risk would have some financial protection in place, but very few of them do,” he said.

“These findings show that conservative or moderate risk takers are the ones who in most cases have decided to put in place financial protection, not those who embrace or worry about risk.”

The research found that higher income households (those earning more than $90K) and those with a mortgage identified most as conservative risk takers and as the types of people to have protection.

Conversely low income households earning under $40k and young people aged 18 to 24 years were more likely to say they avoid financial risks and have much lower levels of cover.

“The research shows a strong correlation between risk taking behaviour and insurance penetration,” Mr Minto said. “Owning a home and having a mortgage, and a higher than average income, appear to be triggers for people to ensure their future has a safety net. The levels of cover held by lower income earners and renters is a concern. If they can’t work again due to injury of illness their debts and other obligations don’t just go away.”

 Other key findings:

• Penetration of all types of life insurance were very low amongst those earning under $40k. Income protection, for example, was held by just 6% of those earning under $40k compared to 37% of those earning over $90k.
• This group also showed the lowest levels of financial risk taking at just 56%, compared to 74% over people earning over $90k.
• Income protection was held by just 20% of Gen Y compared to 38% of Gen X and 19% of Baby Boomers.  Financial risk taking was lowest amongst Gen Y (64%) and highest amongst Gen X (72%).

Mr Minto concluded: “There’s often a perception amongst younger people that they don’t need insurance if they don’t own a property and have no dependents.  We would suggest that insurance such as income protection is extremely valuable for anyone who has regular financial outgoings such as rent and other loans, especially if there is no one else to pay the bills if they lose their ability to earn an income.”

Table 1: Attitudes to financial risk and insurance ownership status

Table 2: Attitudes to risk by home ownership status compared to insurances held

* Collective term for life, disability, income protection and critical illness

Table 3: Attitudes to risk and insurance penetration by income

* Collective term for life, disability, income protection and critical illness

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Jim Minto

Australian parents believe home is the best place to teach children about money, by setting the right example and encouraging children to earn to learn.

A survey by Australia’s largest life insurer TAL found just 4% of parents look to schools to teach children how to be smart with money.

The majority surveyed (62%) believe in encouraging children to earn money outside of the home via part time work as the best way to increase their financial literacy.

The next most popular choice (61%) was showing them by setting an example, followed by teaching children to be entrepreneurial (33%). Younger parents feel this most strongly with almost half (47%) saying children should be taught to be entrepreneurial.

TAL Group CEO Jim Minto said: “The results show there is no single right way to teach children the value and importance of money. But what is clear and encouraging from the results is the majority of parents don’t believe in a hands-off approach.”

The survey found just 10% of parents believed financial literacy comes automatically with time. Almost double the number of males (13%) believed this compared to females (7%).

“What is important is for Australians to receive the right information about money at the right time – whether it is saving for your first home, protecting your assets and income through life insurance or investing for the future.”

“Building and protecting your financial wellbeing is not something to be left to chance.”

Mr Minto said protecting wealth, including one’s future income and dreams, is just as important as building and growing it.

“Many of us remember the golden rules we learned from our parents, such as ‘Save first. Spend Second’ or the power of compound interest,” he said.

“We encourage parents to have the conversations and help their children take the steps necessary to become financially literate.”

Australians can use the free, online Australian Financial Protection Quiz to assess their financial protection needs and compare themselves to national demographics.

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Jim Minto

It may be the season to be jolly, but it’s also a time for Australians to review safeguarding their dreams of gifts, holidays and a financially secure New Year.

As the nation starts to spend up in anticipation of 2015 and people make grand New Year’s resolutions and dream of exciting plans for the future, even the best laid plans can come unstuck.

“Many families understandably take on debt over the end-of-year holiday season, making it an appropriate time to check on the adequacy of a family’s financial protection levels,” said TAL Group CEO Jim Minto.

Christmas and New Year can account for an increase of 35% in retail sales with Australians expected to clock up a giant $30 billion on gifts and food during the festive season this year[1]. In 2013 the average Australian spent $1,215.30 on Christmas[2].

“TAL research has found that only 37%[3] of people say they have some form of financial protection, even though we expect that figure to be higher because many people may not realise they have some form of life insurance via their superannuation fund. However many people are willing to go into debt over the festive season,” Mr Minto said.

“The point is, people should live life to the full but make sure they also have financial protection in place which not only provides peace of mind but can help meet financial obligations if needed.”

A wake-up call:

• According to the Bureau of Health Information, the risk of injury increases over the Christmas period, with more than half a million patients attending NSW emergency departments from October to December 2013[4]
• Over 60% of Australians will be disabled for more than one month during their working life.[5]
• Around 63% of Australians have no life insurance[6].
• For a 35 year old male, life insurance can cost as little as $8.40 per week[7], less than a sandwich in Sydney’s CBD.

“And with many health related risks and injuries seen over the festive period it is smart to have financial protection in place to ensure your festive dreams can stay on track,” said Mr Minto.

“And remember to travel safely over the holiday period and to think of those who depend on you and their needs for protection.”

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[1] http://www.smh.com.au/business/retail/tech-tops-santas-list-as-aussies-tipped-to-spend-30b-this-christmas-20141124-11sq9u.html

[2] http://www.ibisworld.com.au/media/2013/11/25/winners-christmas-season-online-sales-video-games-eating-2/

[3] http://www.tal.com.au/tal-news-centre/media-releases/2013/march/27/kids-more-likely-to-have-life-insurance-than-baby-boomer-parents

[4] http://www.bhi.nsw.gov.au/__data/assets/pdf_file/0018/211833/HQ15_EmergencyDepartment_Oct-Dec2013.pdf

[5] http://www.tal.com.au/About-TAL/facts-of-life

[6] http://www.tal.com.au/tal-news-centre/media-releases/2013/march/27/kids-more-likely-to-have-life-insurance-than-baby-boomer-parents

[7] http://www.fsc.org.au/downloads/file/MediaReleaseFile/2005_0308_fastfacts.pdf

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Jim Minto

Australia’s largest life insurer TAL continues to pay out record benefits and claims while maintaining its strong performance, financial results for the six months to 30 September 2014 show.

Results released by TAL’s ultimate parent, Dai-ichi Life, show TAL’s underlying profit for the six months to 30 September 2014 was $78 million, up from $46 million in the previous comparative period. This result was 69% higher than the weaker first half last year.

Net profit after tax was $71 million, compared to $29 million previously, while ordinary revenues rose 16% to $1.585 billion and claims paid were up $37 million to $491 million over the period. Net profit was affected by one-offs such as interest rate changes, although TAL prefers the underlying profit measure.

TAL’s embedded value grew by $221 million to $2.179 billion.

TAL Group CEO and Managing Director Jim Minto said he was pleased with the result in what have been difficult market conditions.

“TAL has been focusing on the long term sustainability of the business. We have been delivering for customers for 145 years and want to ensure we continue to do so sustainably for many decades to come.

“Significant challenges remain across the industry in terms of claims experience, regulatory change and an increasing focus on the quality of advice and product sustainability.”

“TAL continues to enhance its claims management with a focus on ‘return to health and work’ initiatives and we are focussed on generating greater business efficiency.”

“This is all part of our over-arching strategy of delivering sustainable products and services to our customers and partners. Central to this strategy is a multi-channel approach to provide freedom of choice to customers so they can obtain financial protection in ways and means of their choosing.”

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Helen Conway

Australia’s largest life insurer TAL has been awarded an Employer of Choice for Gender Equality Citation by the Commonwealth Workplace Gender Equality Agency.

The citation is awarded to organisations that meet rigorous standards in workplace gender equality and recognises the actions those organisations have taken to make lasting change to achieve gender equity.

TAL Group CEO Jim Minto said: “TAL is enormously proud to have been awarded the Employer of Choice for Gender Equality Citation which recognises the work we as a company have implemented to remove gender inequality from the workplace.

“This has involved closing the pay gap for all roles and a range of initiatives to promote greater diversity and inclusion for all regardless of gender, racial background or physical ability. Our work on diversity and inclusion is ongoing to ensure we maintain our positive and supportive workplace culture and to help our employees achieve their potential.”

Helen Conway, Director, Workplace Gender Equality Agency, said: “The WGEA Employer of Choice for Gender Equality Citation recognises organisations that have demonstrated an active commitment to gender equality in their workplace with a focus on removing the structural and cultural barriers that prevent the full participation of women at work.

“Employees should view this citation as a guiding light when making employment decisions. They should see it as a symbol of an organisation that is an industry leader, a facilitator of change and an employer who is committed to removing barriers that prevent all of their workforce from participating fully in the workplace.”

Key activities in TAL’s broader gender equality program include:

• Closing the pay gender gap to almost 100% equal pay across the organisation
• Maternity (and paternity) support, including introduction of popular Working Mum’s and Working Dad’s Programs
• Hiring both genders on equal pay for the same roles
• Management training on gender equity
• Monitoring, measuring and reporting of diversity and inclusion activities.

TAL was recently awarded Employer of the Year in the 2014 Money Management Women in Financial Services Awards in recognition of its commitment to gender equality, and Mr Minto was recently appointed an honorary Pay Equity Ambassador for the Workplace Gender Equality Agency in recognition of both TAL and his personal commitment to pay and gender equality in the workplace.

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Jim Minto

Australia’s largest life insurer TAL is urging two Commonwealth Government-initiated inquiries to improve regulation of annuity ‘income’ products to help redress the massive retirement income shortfall facing Australia.

In a submission to the Australian Government’s Review of Retirement Income Stream Regulation, TAL calls for retirement income regulations to enable greater product choice and income certainty for Australians to better meet their retirement income needs.

TAL has already called for greater use of annuities via its first and second submissions to the Financial System Inquiry, which itself called for life insurers to play a bigger role in helping to solve the nation’s looming retirement income deficit.

TAL Group CEO Jim Minto said: “We strongly support the recognition by these two inquiries of the role that life insurers could have in combatting the current and future national retirement income shortfall, and the need to provide the regulatory settings to enable this to happen.”

In terms of the nation’s retirement income shortfall, called ‘longevity risk’ because people outlive their savings, both the FSI Interim Report and the Review of Retirement Income Stream Regulation discussion paper by Treasury note that deferred lifetime annuities (DLAs) – and all types of annuities – that can legally be provided only by life insurers could be part of the solution.

However, there are a number of regulatory barriers currently restricting the availability of relevant and appropriate income stream products in the Australian market by life insurers.

“TAL strongly supports the provision of incentives to encourage retirees to purchase retirement income products, particularly lifetime and deferred annuities. Annuity income can help retirees plan with greater certainty and flexibility to manage their financial affairs, thus reducing the potential burden on Government funded pensions,” Mr Minto said.

“The main disincentive for consumers is that DLAs do not initially have the same tax treatment that other superannuation and retirement products do. Retirees don’t understand why they should have to pay more tax for DLAs. Other regulatory barriers inhibit life insurers from developing innovative annuity products because of the heavy regulatory cost they attract.

Given the average person underestimates their own longevity, there is a great need for longevity insurance via deferred lifetime annuities – which for an initial payment provides a guaranteed income stream for the rest of the holder’s life – whether purchased with superannuation or non-super assets.

The FSI’s Interim Report noted that according to the OECD, the size of Australia’s annuity market is only around 0.3 per cent of GDP (Gross Domestic Product), compared with 28.8 per cent in Japan, 15.4 per cent in the United States, and more than 40 per cent of GDP in some European countries. The report also stated that the Government bears much of Australia’s longevity risk by providing the Age Pension, which contributes to the low demand for longevity-protected income products.

Inquiry Chair David Murray in his Interim Report speech said: “The interim report observes that the retirement phase of superannuation is under-developed and does not meet the needs of many retirees to manage longevity risk. We think there is an opportunity for innovation to deliver better outcomes for retirees and better meet the needs of an ageing population.”

Mr Minto said: “TAL could not agree more.”

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Jim Minto

Survey findings from Australia’s largest life insurer TAL show the majority of Australians either admit they do not have adequate financial protection or simply don’t know if they have enough.

Conversely, 45% of people say they do have enough life insurance cover if they or their partner could not work again.

TAL believes Australians may be falling victim to false confidence about the adequacy of their life insurance given the nation’s well-documented huge underinsurance gap.

TAL Group CEO Jim Minto said: “I am surprised nearly half of the respondents felt they had enough cover because a lot of actuarial research shows they actually don’t. In our experience, a number of common misapprehensions can give rise to a false sense of security.

First, there is the mistaken belief that life insurance is a single, one-size-fits-all solution. It isn’t because every person’s and family’s circumstances are different, and different types of life insurance serve different purposes.

Second, there is a belief that life insurance in superannuation automatically provides sufficient protection alone. Insurance through super has been fantastic for millions of Australians but unfortunately most people just retain the low, default level cover without assessing their personal needs.”

The research also shows more than two-thirds of people with just a single type of insurance – that is, one out of the four forms of life insurance – subsequently believe that they have enough insurance overall.

“Often people seriously underestimate how much money they will need if they are unable to work again,” Mr Minto said.

The survey found that more than half (56%) said they either didn’t have enough life-related insurance (33%) or didn’t know (23%).

Depending on personal circumstances, different forms of life insurance are appropriate to protect people at different stages of their lives.

Mr Minto said: “The reality is most people need some combination of life, income protection, critical illness and total and permanent disability insurance. It can be a complex area, and we encourage people to ask for help so they can have the peace of mind that they have adequate cover rather than just hoping for the best.”

Other research findings include:

• Younger people (aged 25-34) are more likely than their older counterparts to recognise that they don’t have enough insurance (46%)
• Only 28% of those who rent say they have enough life insurance
• Those who believe they have enough insurance are more likely to:

o    have a high household income (53%)

o    be mortgage-free (67%)

o    be married (49%).

“The real message here is that all Australians should check their life insurances at least once a year to make sure they have the right types and amount of protection. A rule of thumb that many believe that the minimum life and lump sum disability cover that should be taken out is 10 to 15 times the life insured’s annual salary. This in turn creates an income to meet ongoing needs of their family should the worst happen.

“Otherwise, despite their best intentions, people may be at risk even while they believe they are safeguarding their future dreams and the security of their family if they couldn’t work again for some unforeseen reason.”

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