The number of Australians taking out a life insurance policy has dropped by 9% in the last two years, with cost issues proving the largest roadblock in the decision by many households not to take out cover.
That’s according to the the latest 2020 Life Insurance White Paper from insurer NobleOak, which included a national survey of over 1,000 Australians with and without life insurance policies.
In 2018, NobleOak reported that 56% of Australian consumers purchased a life insurance policy, whereas that number has now dropped to 47% in 2020.
Of the survey respondents that did have a current life insurance plan, NobleOak found that just 32% were planning on renewing their policy this year, with respondents highlighting the cost of insurance (30%) and their unlikelihood to make use of it (27%) as the two main factors for not renewing.
“Interestingly, 27% of respondents said they won’t be renewing their cover as they don’t expect to use it, said NobleOak CEO, Anthony Brown.
“This shows there’s a gap in the real understanding of the value in holding Life Insurance. It’s something we all hope we never have to use but is there for those unforeseen circumstances.”
Perhaps surprisingly, the Whitepaper revealed that younger Australians were more likely to have an active life insurance policy. According to NobleOak, 54% of respondents in the 30-34 year old age bracket currently hold a life insurance policy compared to just 36% of 55-60 year olds.
Australians relying on savings for cover
So with many households forgoing life insurance altogether, do Australians have a financial backup plan in place in the event of an unexpected illness or loss of income?
NobleOak found that the vast majority of survey respondents would rely on their savings (65.1%) if they contracted a major illness and couldn’t work, while 51.8% would be relying on private health cover or medicare (51.8%).
Many Australians would also look to cut back unnecessary costs if they were to lose a part of their income.
According to the NobleOak report, entertainment costs would be the first to go followed by holidays in second place and health and beauty expenses in third, while mortgage or rent repayments would be the last cost to be cut.
RELATED: How much life insurance do you need?
Still like the idea of having a life insurance policy to cover you, but not sure where to start?
In July 2019, the inaugural Mozo Experts Choice Life Insurance Awards were released, recognising exceptional value and exceptional quality policies for life insurance, life and TPD insurance, life and trauma insurance and income protection insurance.
Get started by checking out the full list of 2019 Mozo Experts Choice Life Insurance Award winners, including NobleOak, or head over to the Mozo life insurance comparison hub to compare even more policies.