FAMILIES UNPREPARED FOR LOSS OF SECOND INCOME
Sydney February 27, 2019
Many Australian couples and families could face financial hardship if the secondary income earner was unable to work, according to MetLife Australia research into life insurance.
The MetLife Adviser-Client Relationship Report 2018 examined consumer and small to medium enterprise (SME) attitudes to purchasing life insurance through a financial adviser, surveying 1191 people in total.
The report found that of consumers with life insurance who are married or in a de facto relationship, 73% have more than one income earner in the household. Of this group, 58% state that they wouldn’t be able to maintain their existing lifestyle for any longer than two years should the secondary income earner be unable to work.
A significant number of these secondary breadwinners are working casual or part-time. Of these workers, 48% of women and 25% of men are the parents of dependents. MetLife Australia found this group holds lower levels of insurance in all categories when compared to their full-time counterparts. Specifically, Death cover is held by 70% of casual and parttime workers compared to 81% of the overall group, Total and Permanent Disablement (TPD) cover is held by 51% compared to 60%, and Income Protection is held by 48% compared to 58%. The largest difference is seen in Trauma cover, with only 4% of casual and part-time workers covered compared to 35% of the overall group.
Casual and part-time workers are also less confident than full-time workers in explaining the various features of their life insurance to a friend or colleague, MetLife Australia found.
Commenting on the findings, Matt Lippiatt, MetLife Australia Head of Retail Sales, said that underinsurance is a real problem in Australia, particularly among casual and part-time workers. There is clear evidence that many families are unprepared for the loss of secondary income, with greater focus often given to the primary income earner.
“Particularly for families with children, if one partner is staying at home or working part-time, it can be just as important to insure them as it is the primary breadwinner,” he said.
“Consider, for example, the cost of finding appropriate childcare or the possibility of the main income earner having to reduce their working hours to help take care of children or a sick partner.”
Mr Lippiatt said the findings highlight an opportunity for advisers to review their clients who’ve recently started a family and engage with secondary income earners to ensure their income and lifestyle are protected.
“From a product perspective, there are new solutions coming onto the market today that recognise the changing nature of work and cater specifically to the needs of young families. A good example of this is our Income Protection product which can cover people working as little as 15 hours a week. We also know from our research that being able to take time off work to care for a sick child is really important to families, which is why we’ve incorporated this feature into our offering for this segment,” he said.
MetLife Australia recently launched MetLife Protect, a modular life insurance product enabling financial advisers to meet the needs of SMEs and families. The product is designed to be tailored and flexible over time to meet specific and evolving individual needs. For more information, visit metlife.com.au
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