Point of differentiation rather than peripheral item
By
Darin Tyson-Chan Wed 03 Mar 2010
The level and type of insurance cover offered by super funds could be a selling point in the future.
The underinsurance problem affecting the Australian public could prove to be a business opportunity for superannuation funds in the future, according to the Investment and Financial Services Association (IFSA) chief executive John Brogden.
Brogden said better insurance offerings could be a significant differentiating factor between funds.
"Rather than being an add on, where you find later on you've got life insurance in your superannuation, it's almost going to become a selling point for super funds where they have group products," Brogden said.
His comments came as IFSA released the latest insurance research findings from the National Centre for Social and Economic Modelling (NATSEM) at the University of Canberra, undertaken as part of the professional body's Lifewise campaign.
The study highlighted the effect of underinsurance and found that based on current insurance levels, a representative Australian family's income will be cut by around 50 per cent if the main income earner suffers injury or falls ill and can't work or if the spouse becomes disabled or dies. In some cases this would represent a weekly income as low as $600.
Furthermore, under the same parameters this situation would continue to affect the family for up to 10 years.
The survey also found appropriate income protection insurance would more than likely replace 80 to 100 per cent of the family's income in the short to medium term.
Additional results from the research revealed current underinsurance levels across the country would cost the Australian government around $1.3 billion in social security payments over the coming 10 years.
The Lifewise/NATSEM Underinsurance Report also showed one in five families would experience the death of a parent or an accident or illness that would prevent a parent from working. On top of this fact, 95 per cent of families were found to have inadequate levels of insurance.
"We think this research brings home to all Australians the risk and the reality of underinsurance," Brogden said.
The two non-consecutive alphabetic letters encountered most often last week caused more controversy than the underlying policy they represented, Wouter Klijn writes.... read more »
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