Australians are letting their trauma insurance lapse shortly before they need it, according to data from Asteron Life.
The average age for a trauma event and subsequent insurance claim is 49, the group stated. However, statistics show the average age of cancellation or lapse is 44, while the average age of take-up is 40.
Forty-nine is the common age for trauma insurance due to mature onset diseases like cancers, cardiovascular diseases and stroke, according to Asteron.
“In terms of the business that was lapsing … 71 per cent was business that was fully lapsing off in terms of coverage,” Asteron Life executive manager Mark Vilo told InvestorDaily.
“Twenty-five per cent of that was actually what we call partial lapse, and partial lapse is where you reduce the cover or you make a subtle change to that cover.”
Reasons for the lapse include affordability and a change in marital status. Mr Vilo suggested financial advisers should review the clients’ needs based on these changes.
“In situations where affordability is challenged, you’re better off to reduce some of your cover and still have some in place, rather than remove it altogether and leave yourself fully exposed,” he said.
Mr Vilo added that part of the reason for lapses may be that advisers made a recommendation to move their clients’ cover elsewhere.
