News Life and Health14 May 2018

Australia:Young workers unlikely to opt in to buy life cover

14 May 2018

Behavioural economic research suggests that most younger members will not take up life insurance if it becomes an opt-in cover, says Australian Institute of Superannuation Trustees chief executive Eva Scheerlinck.

Superannuation funds face an uphill battle in persuading reluctant young workers to take out life insurance. The federal government last week moved to remove default cover for new members aged under 25.

The consequence if the super funds fail to attract young workers to opt for life insurance would be higher premiums for all members, The Australian Financial Review reports citing industry experts.

According to Treasury modelling, five million people would have the chance to save about A$3 billion ($2.2 billion) in insurance premiums, which would otherwise eat away at their savings, with the move to opt-in cover.

Life insurance industry leader Jim Minto said super funds will need to engage more with younger members, particularly for those working in high-risk industries, and "refine their sign on processes".

"It's an absolute fact that people under 25 are claiming on their insurance, so it's not a wasted activity, which is why it's being provided," he said.


 


 

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