Shifting perspectives: New research investigating perceptions and attitudes to life insurance inside super

Recent years have seen a decline in insured members, an increase in super-related complaints, and a growing expectation that super funds will be required to take on more responsibilities of giving financial advice.

 

So, the question arises: how can we better educate members about their insurance needs? The answer lies in clear, simple, and timely journeys for members, empowering them to make informed decisions. New research shows that more Australians want engagement, especially when facing life changes. By offering an insurance education proposition and employing an omni-channel engagement strategy, we can help to address the government’s recent call to improve communications and engagement with members.

 

Partnering with research house Nature, we conducted a study in 2022 to understand how individual Australians perceive life insurance within their super. The study involved 1,253 participants, who were a nationally representative sample of working Australians, factoring in age, gender, and location. To gauge changes over time, we compared these findings against a similar study carried out in 2016. We’ll be sharing the results with you in two parts. The first part delves into the awareness of insurance in super, individuals’ financial fitness, risk of members switching funds, and sentiments toward super funds proactively contacting members. 

Apathy continues to play a significant role, with 76% never making any changes to their insurance in super. However, once respondents were made aware of their insurance, 67% then felt positive about it. Additionally, 47% felt that understanding life insurance is complex. This highlights a need to educate members about their changing needs requirements and emphasises that a set and forget approach might not be in their best interests.

Earlier research showed 20% of respondents didn’t know who their super fund was, now only 1% are unsure. This increase in awareness could have been influenced by a range of factors including the COVID-19 early release of super scheme, legislative changes such as Protecting Your Super (PYS), Putting Member’s Interests First (PMIF) and Stapling or more super fund advertising.

 

There are no major differences in Australian’s self-reported perceived ‘financial fitness’, respondents are still overly confident about their grasp on their financial situation. The earlier research indicated that only 28% knew they had insurance inside super, that number has increased significantly to 73% demonstrating that the industry is making head way in the right direction of firstly raising awareness, however the next step is to ensure they check their insurance and assess their needs more regularly.

 

This is particularly important when 56% of respondents stated that they would not survive three months without their primary income. This uncertainty about sufficient life cover indicates the need for more education regarding insurance needs delivered in a simple and clear way.

45% of Australians are open to moving super funds, with 22% actively considering their options, 12% wanting to move but are unsure of their options, 10% willing to move if they changed jobs, and 1% wanting to leave due to dissatisfaction with their super fund. 

There has been an increase in Australians reporting that they find understanding their life insurance complex (30% in 2016 compared to 47% in 2022).
 

There remains a significant awareness issue for many people, particularly at an earlier age where engagement with insurance and financial services is generally low. In many instances this is where insurance is most important because they have less assets to fall back on.

The positive news is that more working Australians now express comfort with their super fund contacting them about insurance options in the event of changing life circumstances.
 

Life changes, like moving employers, reaching key ages and balance thresholds, or hitting key life milestones, are timely opportunities to provide members with relevant, simple and clear information. 

This presents an opportunity for us to communicate and provide more value to members by offering super fund members insurance education that focuses on how needs change through various life changes (triggered by age, change of employer, change in contributions, adding beneficiaries, tenure and levels of super engagement). Members can be given the information to choose the right level of insurance for their unique circumstances via various touchpoints including:
 

Trustees can learn more about their membership and its needs when members are engaged, allowing them to personalise their offering accordingly and ensure that default cover is fit-for-purpose. 
 

Going beyond insurance, AIA also provides value with the AIA Embrace ecosystem of health and wellbeing tools and services, supporting individuals through their entire wellbeing journey. The programs inspire and incentivise members to know and improve their health, and if they become unwell - we provide them with the care and support they need to get back to health and work sooner. So they can thrive, not just survive. This leads to lower premiums and ensuring the system’s sustainability.
 

Sustainability is broader than just stable prices – it extends to ensuring that a product’s features meet genuine needs, and that the community is confident that the product offers enduring value and fairness. In the long run, this will create a healthier, more sustainable future for everyone. 
 

For more information on these findings or how we can collaborate to address these challenges and explore opportunities for member education, we invite you to contact your Head of Partnerships.