Financial Literacy and Life Insurance
While the majority of Australians hold some form of life insurance, a recent report shows that only half of these people understand their cover and policies fully.
The report, prepared by CoreData, also shows that people who work with a financial adviser have a much higher rate of financial literacy regarding life insurance. The average literacy score among people without financial advisers is around 4.5, while clients of advisers average a score of 6.7 out of 10.
It is very important to understand the implications of insurance available through superannuation funds, and your financial adviser can provide insight into the correct amount of cover and fund options.
Other key findings of the report include:
· 17.4% of Australians don’t know if they have trauma cover
· 38.2% know that being diagnosed with a terminal illness is a trigger for a life insurance payout
· 7.8% of those with life insurance said they ‘went with their gut feeling’ when it came to choosing how much cover to purchase
· 40.3% of consumers said they were ‘Not Sure’ if they could purchase travel insurance coverage through their superannuation; 7.6% believed they could get this cover through super
· More than half of respondents were unsure whether term life insurance purchased through super is tax deductible (56.6%) or whether term life purchased outside of super is tax deductible (55.4%)