Many organisations not aware that employee insurance premiums may be increasing due to challenges within the life insurance market.

New survey reveals Australian businesses are in the dark about the changing superannuation and insurance landscape

Recent significant changes to the superannuation and insurance landscape have left Australian businesses reeling, with many taking little or no action to mitigate the impact on their employees and their bottom line.

This is one of the major findings of the recent Aon Hewitt Superannuation and Insurance Pulse Survey (the Survey). The Survey, which collected data from 131 organisations around Australia, provides an overview of current superannuation and employee insurance practices and details how organisations are responding to the rapidly changing environment.

The results of the Survey are of particular interest now, given the number of significant changes to superannuation that have recently been introduced. These include the second increase in the superannuation guarantee (SG), from 9.25% to 9.5% in July 2014, and changes to concessional contribution limits.

Ashley Palmer, Principal & Actuary within Aon Hewitt’s Retirement and Financial Management team, said that organisations were well-prepared for the second increase in the SG and other legislated changes such as MySuper. However many organisations are not aware that employee insurance premiums will in many cases be increasing due to challenges within the life insurance market.

“Many organisations are unaware that premium increases are on the cards because they have premium guarantees in place. They may therefore not be informed of the likely increases in premiums by their insurer or super fund until the guarantee is due to expire,” he said.

In fact, according to the Survey, just under four out of ten (38%) organisations have been informed that their group life premiums will rise, and of those which have been informed, more than half (52%) do not know how much the increase will be.

“Australian companies need to assume that insurance premiums are going up, and the risk for companies is that the increases are potentially substantial, which could have a big impact on their bottom line where the employer pays these premiums. The Survey shows that in some cases premiums have more than doubled.

“When you think about the effect of MySuper and the insurance changes together, it is astounding that nearly 40% of organisations have no intention of undertaking a review of their corporate superannuation and insured benefit arrangements to understand the possible effects,” Palmer explained.

When companies were asked about their policy regarding the cost of insurance, approximately 60% of companies surveyed reported paying insurance premiums in full or in-part on behalf of employees, with employees meeting the full cost themselves in the remaining cases.

“How employers manage the communication of these increases to their employees will also be vital,” Palmer said.

Other key findings from the Survey include:

• Only around one third (31%) of organisations set aside additional funds on top of the remuneration review budget to cater for the increase in SG to 9.5% in July 2014, a further 28% allocated funds from within the remuneration budget, and for 18% of organisations their employees absorbed the cost under a total remuneration package approach.
• When employers currently paying above the SG were asked whether they intend to continue to pay more than the mandated amount, over half (56%) said that they would be giving up their market leading position in the future to eventually be paying at the SG rate.
• Only a quarter (25%) of those employers currently paying above the guaranteed level said they would continue to increase their super at the same pace as the SG.

In conclusion, Palmer said that given superannuation is the highest benefit spend after pay for most organisations, and that around 60% of organisations pay insurance premiums in full or in part for their employees, Australian companies would be well advised to be aware of the changing landscape and to take action to mitigate risk.

“The potential benefits of conducting such a review are many, and include identifying cost savings, harmonising approaches, removing or de-risking legacy arrangements and implementing consistent and competitive insurance arrangements for all employees.

The bottom line is that superannuation and related insured benefits are an expensive and highly regulated component of an employee benefits package, so taking steps to maximise the potential return on this major spend and communicate it effectively is crucial for success,” Palmer said.

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Industry needs to improve the quality of advice: ASIC

An ASIC review of life insurance advice has found that the industry needs to improve the quality of advice and ensure that the interests of consumers are given priority.

ASIC’s review of more than 200 advice files from large, medium and small Australian financial services (AFS) licensees found that 63% were compliant. However, more than one third (37%) of the advice consumers received failed to comply with the laws relating to appropriate advice and prioritising the needs of the client.

‘This is an unacceptable level of failure, and the life insurance industry is now on notice to lift standards and professionalism. Both insurers and advice firms need to work on delivering a consistently better service for consumers’, ASIC Deputy Chairman Peter Kell said.

‘Life insurance is a key product through which consumers manage risk for themselves and their families. It is therefore important that both the products and the advice meet the consumer’s requirements.

‘There is both a need and a demand for quality life insurance advice, and our report provides examples of advisers delivering a service that meets the needs of their clients. However, this result must be achieved on a more consistent basis’, Mr Kell said.

ASIC’s report sets out the various commission models that are used to remunerate advisers in the life insurance sector. The report found that high upfront commissions are more strongly correlated with non-compliant advice, including in situations where the recommendation is to switch products.

‘The industry as a whole needs to consider how remuneration and compliance practices can better support good quality outcomes for consumers’, Mr Kell said.

Affordability of insurance is an important issue for consumers, and ASIC’s report includes cases where clients were recommended insurance cover that was likely to be very difficult to afford given their financial circumstances.

ASIC’s report confirmed that the high rate at which life insurance policies are lapsing warrants consideration by the life insurance industry to ensure that industry practices are sustainable.

ASIC has made a number of recommendations for insurers, AFS licensees, advisers and their professional associations, including a focus on how to ensure client interests are met and balancing the issue of affordability versus cover.

Mr Kell said, ‘ASIC is committed to working with the industry to address the problems we’ve identified and to improve outcomes for consumers.’

Following the surveillance work and the conduct that has been uncovered ASIC has commenced follow-up investigations in certain cases which are ongoing.

‘Where inappropriate advice was provided we are considering enforcement action or other regulatory action’, Mr Kell said.

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NAB Essential Life launches life insurance protection online process.

It’s now easier than ever for Australians to protect themselves and their loved ones with life insurance, with the National Australia Bank (NAB) launching the new online NAB Essential Life protection to coincide with MoneySmart Week.

Customers will be able to apply for the NAB Essential Life insurance protection online at nab.com.au in only a few simple steps and receive cover immediately.

To celebrate the launch of NAB Essential Life, customers who receive coverage online by 31 October 2014 will receive a 10 per cent discount on their premium for the life of the policy.

Unfortunately, many Australians don’t realise the importance of life insurance. According to the latest MLC Wealth Sentiment Survey, 50 per cent of Australians don’t want or don’t think they need life insurance to protect their family’s finances in the event something happens to them.

Retail Wealth Product Executive General Manager, David Hackett said NAB Essential Life was designed to make it simpler for Australians to protect their family’s future with life insurance.

“We are constantly looking at ways to make it easier for Australian families to protect their financial future, and address our nation’s underinsurance problem,” Mr Hackett said.

“We all know that life doesn’t always go according to plan and life insurance can help protect your loved ones if the unexpected happens.

“The launch of NAB Essential Life marks the first time our customers can apply for and receive life insurance protection quickly online at nab.com.au, and is an important part of our strategy to make quality financial advice and services accessible to more Australians.

“The last thing anyone wants is to leave their loved ones in financial difficulty after they are gone. NAB Essential Life gives you the peace of mind that your family will be protected.”

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Damien Mu

Connecting bicycles and smoothies with life insurance might seem like a difficult task, but that’s exactly the challenge AIA Australia is giving financial advisers as they take AIA Vitality on a pilot roadshow around Australian shopping centres.

In the last few months, the life insurer has partnered with two financial advisers – Ged Lowe, at Lowe Financial Group and Andy Hills from All Financial Services – to raise awareness of the incentive-based health and wellness program with prospective clients. Interactive kiosks (image attached), including bicycles that blend smoothies as you pedal, were set up in Melbourne’s Westfield Southland and Sydney’s Westfield Warringah to drive consumers to engage with the initiative.

Speaking about the pilot, Ged said that AIA Vitality and the interactive kiosks provide a new way to talk with people about life insurance.

“We’re turning the conversation on its head. We’re saying to people that we can effectively pay them to be healthy through the tangible, immediate benefits that make up the program, like discounts on shopping, travel and insurance premiums. It’s no longer just talking about ‘what cover will you need if things go wrong’, but we’re also talking about ‘helping you to improve your health and you get paid to do it’, which appeals to people’s aspirations rather than fears. This is a step-change for advisers writing risk.”

Since launching to the market in March, AIA Australia has seen a rapid increase in advisers now writing policies with AIA Vitality attached. More than 1 in 4 policies have been written with AIA Vitality since inception, and over 900 advisers have written a life insurance policy with AIA Vitality attached to it. These figures are destined to grow with the program recently expanded to be available on investment platforms.

Chief Executive Officer for AIA Australia, Damien Mu, believes that AIA Vitality is making good progress in changing perceptions about life insurance, both from the customer and adviser perspective.

“As an industry, we constantly hear about the need to improve engagement with life insurance, both to help financial advisers ‘promote it’ but also to make more Australians open ‘to it’. So, we wanted to do something a little different.  We are starting to see AIA Vitality lift engagement of customers in their own life insurance.”

“Our message – Life insurance that pays you to be healthy – is prompting consumers to review their life insurance need which is a positive change for the industry.  The kiosks are a fun and light-hearted way to get people interested in the AIA Vitality program. They can see how it integrates into their daily lives and incentivises them to change their behaviour, and the adviser can latch onto a unique selling point for life insurance in Australia that they’ve not had before.”

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The second annual TAL Australian Financial Protection Index has revealed a big jump in the protection levels of Australians, particularly Generation X.

The national Index score leaped 38% from 24.2 out of 100 last year to 33.5 this year, revealing Australians over the past year have taken a keener interest in their life insurance in its various forms: life, illness, disability and income protection.

TAL Chief Customer Service and Operations Officer Penny Coates said although she was pleased the Australian Financial Protection Index has risen over the past year, the overall score was still low indicating there was much work yet to be done to improve financial protection levels.

“While underinsurance is still is big problem in Australia, the  TAL Australian Financial Protection Index scores have increased in their second year indicating progress is being made to improve financial protection and close the nation’s big underinsurance gap,” Ms Coates said.

“Why has the Index score gone up nationally and across all the demographic groups? I think awareness has been improving, consumers are being more active, and in particular younger generations are taking matters into their own hands empowered by the digital world.

“We know that the life insurance industry has been paying more claims in recent times, and for TAL record claims, demonstrating the high value and need of life insurance in protecting customers and their families when they most need it in life.” 

Voice for Life

The 2014 Index results are being released as part of a new initiative developed by TAL, called Voice for Life. This initiative will better inform and educate customers and the broader community about the crucial societal role of financial protection. There has been a lot of commentary around the state of the life insurance industry recently. We believe that life insurance has a sustainable future and key to this is championing better outcomes for consumers.

Of all the demographic groups researched, Generation X (aged 35-49), higher income earners, those with children at home, those with mortgages and those who declare themselves as risk takers scored the highest index results at around 40 out of 100.

The number of people with a score of between 70 and 100 almost doubled to 14% of the population, while the number with a score of zero dropped a third from 30% to 20%.

Australia’s largest life insurer, TAL developed the Australian Financial Protection Index  last year in conjunction with Galaxy Research to track and analyse perceptions of underinsurance across the four major forms of personal life insurance*.

More than 1200 Australians were surveyed on the types of life insurance they held, as well as if they felt they had enough cover if they or their partner could no longer work. The results were modelled to calculate a score from 0 to 100 where 100 indicates that people have each form of life insurance and that they believe they have adequate coverage.

Protection gap is slowly closing

The results of the study suggest that while the majority of Australians still do not believe they have enough financial protection, the gap is slowly closing.

Ms Coates said: “Take-up of life insurance has continued to increase, particularly through superannuation, but the low scores reflect that on the whole there is still a substantial gap between the level of cover that people think they need and the level of cover they actually have.

“The challenge for the industry is to convert awareness of the problem into action to address the issue, and the TAL Australian Financial Protection Index is a tool to help us do that.”

Ms Coates added: “Twenty per cent of people still have no life insurance and acknowledge this is not an adequate situation which is very worrying. Even more concerning is the fact that lower income earners make up a large percentage of those who are most underinsured, yet these are the very people who can least afford the financial pressure which comes with the death, illness or injury of a member of the household.”

Table 1: Age comparisons

The survey found that the Financial Protection Index score peaks in the Gen X age group with scores lowest among those aged under 25 years.

Ms Coates expanded: “We see the highest Index scores among households with dependent children, those with a mortgage and those with higher incomes. The Index scores for all of the various age groups and generations tend to reflect these factors.”

Table 2: Summary of other key demographic findings

In other findings, the Index revealed that for the second year in a row, take up and awareness of life insurance was greatest among those with a mortgage. In addition, mortgagees were significantly more likely to perceive themselves as having adequate protection.

Highest protection characteristics

Ms Coates said it is not surprising that Australians with mortgaged homes see a greater need for financial protection via life insurance products*.

“Life insurance is an important way of protecting assets, like the family home, as well as ensuring that financial commitments will be met in the event that an earning member of the household is no longer able to contribute,” she explained.

The results of the Index also shed light on how attitudes to risk can impact take up and awareness of the need for life insurance.   The Index found that those who claim to take the most risks actually record a higher Index score.

Ms Coates concluded by saying that in positive news for all Australians, the 2014 Index score for every demographic group looked at has increased year-on-year.

“Clearly, awareness of the need for life insurance is improving. Claims have risen over the past 12 months, highlighting the very real benefits of life insurance, and greater consumer activism has also helped reinforce an understanding of the financial protection that life insurance can offer.

“We hope that an increasing awareness and understanding of the benefits of life insurance will continue to help close the financial protection gap in Australia.

Notes

1. This survey was undertaken online by Galaxy Research with 1,266 Australians, from the ages of 18–69 years old. Age, gender and region quotas were applied to the same and the dataset was weighted to national proportions.
2. The model didn’t require stay at home parents, the retired and those over 65 to have income protection.
3. *Definition of the four main forms of life insurance: Life – lump sum upon death; Illness – lump sum for defined illnesses; Disability – lump sum upon permanent and total disability; and Income Protection – regular income payment upon defined illness/disability.

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Claire Wivell Plater

Ancillary or ‘add-on’ insurance, sold at the point of sale, is a new focus for ASIC in 2014, with all businesses selling general or life insurance, or offering credit as an ancillary offering, likely to be affected according to The Fold Legal (The Fold).

The Fold’s managing director, Claire Wivell Plater said ASIC has already spent considerable time looking at motor, consumer credit and travel insurance and it’s clear that they’re not liking a lot of what they’ve seen.

“ASIC has devoted two sessions to this issue at its 2014 Annual Forum, bringing the CEO of the UK Financial Conduct Authority, Martin Wheatley, over to Australia to speak about the UK experience,” she said. “Mr Wheatley let slip a few tips about how they do it in the UK; they follow the money and look at areas such as business model, speed of growth, comparative gross margins, customer base and culture.”

While not all add-on insurance is problematic, potential remedies are under consideration in the UK and Australia. “Many insurance products sold at the point of sale offer a convenient means of purchasing coverage which in some cases is not readily available through conventional channels,” Ms Wivell Plater said. “The underpinning philosophy seems to be that the more obstacles that are put in the way of people’s buying decisions, the better the quality of the decision and the less opportunity for mis-selling and overselling. Regulators are now using behavioural economics to analyse financial services selling practices – with alarming potential consequences for distributors of ancillary insurance and credit products.”

Insurance advisers should be reviewing the following processes within their business:

• Product design- are products giving value for money?
• Sales processes and collateral – are customers fully aware of what they are buying?
• Remuneration structures – minimise incentives to oversell or missell.
• Sales practices in the field – just because you haven’t asked your staff to, doesn’t mean they aren’t!

“If a sales process includes pre-ticked boxes, bundling of costs into another product, misrepresenting the need for cover, opaque selling practices or remuneration practices that encourage aggressive sales – that is, commissions and volume bonuses – advisers could be singled out for special attention,” Ms Wivell Plater said.

Key indicators of trouble include:

• Narrow coverage, e.g. the policy only insures extreme events that are unlikely to occur
• Coverage of existing rights, e.g. most of the rights to refund, repair or replace provided by the warranty are available under the existing consumer guarantees
• Exclusion of common loss circumstances,  e.g. loan protection insurance which excludes claims arising from the two most common causes of inability to work: bad backs and heart attacks
• Low claims ratios
• High denial rates

Ms Wivell Plater warned that the focus will not just be on existing businesses. “It’s also likely that the licensing division will look at these issues when considering licensing applications, so a review of ‘add-on’ or ‘point of sale’ products must be a priority in order to stay out of the regulators’ sights.”

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John Brogden

Australians are apathetic when it comes to taking action to insure their lives according to new research report from the Financial Services Council and the world’s largest life insurer, MetLife.

The report provides new insights into what motivates people to take out life insurance and more importantly, what prevents them from taking it out.  It shows Australian consumers are willing to insure their visible assets such as their house or car, but most do not consider protecting their lives and their health as a priority.

John Brogden, CEO of the Financial Services Council said: “The research is clear − Australians don’t understand the benefits of taking out life insurance.

“This is a significant challenge for the industry,” he said. “As an industry, we need to change the way we talk to Australians about life insurance if we are to close the $1.1trillion death and disability underinsurance gap.

Damien Green, CEO of MetLife said: “The research shows that most consumers don’t understand life insurance terms such as total permanent disability and income protection.  It found most consumers only think of life insurance as ‘death cover’ rather than the range of protection solutions available.”  “We want Australians to become actively engaged with life insurance so they can make informed decisions about the right products for their specific needs throughout life.”

“The industry needs to work together to develop life insurance products that consumers want and will benefit from,” Mr Green said.

Mr Brogden also said consumers would be most motivated to purchase life insurance if the government provided a tax incentive or disincentive like the current private health insurance arrangements

“This would increase the uptake of life insurance and replace the need for public expenditure in the long term,” he said.

KEY FINDINGS

• 3 in 4 Australians think life insurance is only “death cover”;
• Most Australians don’t understand what life insurance coverage is, or should be;
• Australians overestimate the cost of life insurance and underestimate the value;
• Consumers think the average life insurance premium will cost around $1,500 per year − the average cost of life insurance for a non-smoking Australian male aged 35 is $600 per annum;
• Only 48% of those surveyed own, or  know they own, a life insurance product;
• 1 in 10 of those do not have the minimum recommended life insurance cover;
• Two thirds of those who own a life insurance product don’t know how much they are covered for;
• Most working Australians don’t know how they would decide to choose a life insurance product;
• Life insurance is just as likely to be acquired by default through superannuation than through active purchase;
• Top three reasons why consumers say they don’t buy life insurance and income protection:

1. Too expensive;
2. Waste of money/poor value; and
3. No spare money.

• The top three things that would most  motivate consumers to purchase life insurance are:

1. A tax incentive from the government
2. Purchasing through superannuation without a drop income
3. Taking out a minimum level of insurance to avoid extra tax.

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Craig Parker

Widespread increases in the number of claims across the life insurance sector are having a significant impact on financial advisers across Australia, according to national advisory dealer group Affinia Financial Advisers.

Affinia General Manager Craig Parker said: “Advisers are spending more of their time now than ever managing claims on behalf of their clients for living insurance*. The recent reporting by all major life insurance companies of large increases in claims on disability and income protection rather than traditional end of life insurance demonstrates the opportunity advisers can bring to consumers”.

“Disability cover and income protection over the past decade have become more popular as consumers consider the impact of not being able to work again. Trauma/critical illness cover in more recent years is also being taken up.”

The result is that the ratio of living to death benefits now sits at an historic high at 2.5:1.

*Percentage of Life (death) insurance v Living benefits insurance (Disability and Income Protection)

Source: TAL Accelerated Protection product.

But Mr Parker said that with recent reports that lawyers have been increasingly acting for clients during a claim, he was concerned many risk advisers were not stepping up to advocate for customers at such a time.

“The increased involvement of lawyers in claims is worrying because this is a role advisers should be performing on behalf of their clients. The involvement of a lawyer will not influence the decision of an insurer. Claims advocacy is the role of the adviser.

“The legal profession may not have the same intimate knowledge of a client’s (and their family’s) personal and financial situation as the adviser does. Nor do they hold the same strong relationship with insurance companies or  the understanding of  the intricacies of each specific product a client may have.”

Mr Parker said claims management is a crucial time for clients, and reducing stress and the time involved demonstrates the value advisers provide.

“Claims advocacy is a key service proposition of the financial advice profession and if this is not carried out during this current period of heightened claims, advisers are missing out on a crucial opportunity to demonstrate their value,” he said.

“This includes helping clients manage a disability, recuperation, return to work and other financial considerations.”

NB: Affinia, which is backed by TAL, operates an open product list (APL) business model that allows its advisers to recommend any life insurance product type from any insurer.

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The number of Australians taking out life insurance on the rise.

Motivations for taking out life insurance cover⁽¹⁾ have been revealed in new consumer research findings.

One reason people obtain financial protection is after hearing a story of a friend or family member who has been saved from financial hardship by one or more types of their life cover (including Life – lump sum upon death; Trauma/Illness – lump sum for defined illnesses; Disability – lump sum upon permanent and total disability; and Income Protection – regular income payment upon defined illness/disability).

Australia’s leading specialist life insurer TAL has undertaken research⁽²⁾ to better understand consumer behaviour towards financial protection and planning attitudes.

One in five people (20%) in the national poll said they had heard of a friend or family member who had suffered an injury, illness, disability or even death but their life insurance had saved them and/or their family from financial hardship as a result.

Where people already had life insurance, the number of those who had heard of these safety-net stories rose to one in three (or 33%), indicating the positive experience that life insurance performed can be very motivating to obtain financial protection.

In a separate question about the actual reasons for taking out life insurance, the primary reason given by most respondents at 39% was that they made their own, independent decision, unprompted.

The second main reason was because life cover was already part of their superannuation (32%), followed by being prompted by a family discussion (22%), after a discussion with a financial adviser (19%) and being motivated by a real life story of death, illness or accident (12%).

TAL Group CEO Jim Minto said: “The very high level of unprompted actions being taken by people (39%) is a surprise when so often people talk about low interest or engagement in life insurance. The results also show that stories of how life cover has protected someone they know from financial hardship due to illness or accident can be a real motivator in ensuring they themselves obtain cover.

“I am actually not surprised one in five people have heard of a story how life insurance has saved a family from financial hardship in a time of need.”

While life insurance often only becomes a topic of barbecue conversation when there is a personal connection to a story of someone falling on hard times, financial protection should not be seen as a taboo topic. Life insurance is delivering all time record benefit payments to Australians.

“Let’s face it, life insurance has traditionally been something many people would rather not think about, even though they should. Hearing how life insurance can help financially in a time of need is a compelling reason to ensure protection is in place,” Mr Minto said.

Table 1: Most common reasons for taking out life insurance

Interestingly, Generation Y (specifically those Australians under the age of 25 years) is far more likely to be independently initiating the decision at 48% of that cohort, compared to the average of 39% across all generations.

The research found that while almost one in five (19%) were prompted by an adviser or financial planner to consider their life cover requirements, that figure rises to 26% among Gen Y, compared to just 14% for Gen X and 17% for baby boomers.

“These results reveal that more of our youngest adults are ‘making their own decision’ to take out life insurance at a higher rate than older generations, which shows they are more engaged in their financial affairs than they have been given credit for in the past,” Mr Minto said.

“Younger generations are using technology to take matters into their own hands to seek out services and products to meet their needs, and it appears that their own research is them into seeking out financial products and advice.”

The research continues to show there are the many ways people choose to obtain life insurance solutions, such as via super funds, financial advisers or directly with life companies, which supports TAL’s multi-distribution approach to ensure consumers obtain life insurance products and services in ways they prefer.

——-

1. Life cover is a collective description for the four main forms of life insurance: Life – lump sum upon death; Trauma/Illness – lump sum for defined illnesses; Disability – lump sum upon permanent and total disability; and Income Protection – regular income payment upon defined illness/disability.

2. This survey was undertaken online by Galaxy Research with 1,260 Australians, from the ages of 18–69 years old. Age, gender and region quotas were applied to the same and the dataset was weighted to national proportions.

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Jim Minto

Consumer research into the financial behaviour of Australians has found that an equivalent of 300,000 married and de facto couples admit having secret bank accounts without the knowledge of their partner.

The research conducted by TAL Life Insurance found that while 66% of couples have joint bank accounts, a large percentage also have their own independent finances with many having secret stashes.

A total of 45% of married/de facto people have a bank account to which their partner has no access (36% married but 71% of de facto couples) and 3% have accounts that their partners are not even aware of.

While the average amount held in these secret accounts is $30,000 – $37,700 for males and $22,300 for females – 11% have more than $100,000, 13% contain between $50,000 and $99,999, one in four have $50,000, and for 39% the amount is less than $5000.

TAL Group CEO Jim Minto said he was surprised so many people had secret accounts, with one out of five people saying they maintained these covert accounts as a safety-net in case something happened.

“While we may not know the precise motivation behind all these secret bank accounts, such accounts are no substitute for proper financial protection in the event one’s income suddenly stopped for good or for an extended period as a result of illness,” Mr Minto said.

“We know that people have their own financial goals, or that their attitudes to money might not always be compatible with their partner, so there can be some very good reasons for keeping money and life insurance protection separate.

“But for life insurance planning a shared approach can make a lot of sense when there are joint debts such as mortgages and other shared responsibilities such as children. Ensuring the family has the right amount of cover is very important, and a financial adviser is a great place to start.”

Other key findings:

Table 1: Types of bank accounts couples have

Table 2: Reasons for secret bank account or partner does not have access

• Baby boomers (those aged over 50 years) are more likely to be keeping their secret stash in case something happens – 30% report this as being the main reason compared to 15% of other age groups.
• While the average balance of a secret account is $30,000, Aussies are stashing $18,400 in accounts their partners do not have access to but know about.   Men averaged a balance of $21,100 in these accounts versus $16,600 for women.
• Of the separate but known accounts, 8% or the equivalent of 303,000 people have more than $100,000.

Mr Minto concluded: “We really encourage people to research and consider their risks and protection needs. For example a professional financial adviser can help a couple come to an agreed view about how they can best plan financially for the unexpected.”

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