Gen Y motivated around life insurance

Motivations for taking out life insurance cover¹ 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 research² 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.

Notes to editors

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.

Further information:

Stuart Snell 02 9448 9879/0417 921 235 stuart.snell@tal.com.au 

About TAL: The specialist voice of life insurance in Australia

TAL is a specialist life insurance company with leading competitive offerings in each of its core distribution channels: direct to customers; through financial advisers; and through group and workplace superannuation schemes. With in-force premiums of $1.75 billion, TAL is the second largest life insurer in Australia. TAL is owned by The Dai-ichi Life Insurance Company Limited, one of the top 10 life insurers in the world.