07 December 2018
As the financial services sector undergoes vast change and member expectations shift, life insurers and superfunds need to go back to basics when educating members, particularly younger members, about their financial health and wellbeing.
We need to ensure we’re providing the right support for members now and in the future as regulatory changes take effect.
Consumers are becoming increasingly sceptical about the financial services industry including superannuation, insurance and financial advice.
With regulatory changes set to remove default insurance in super for many people, including those under the age of 25 from 1 July 2019, life insurers and superfunds have an opportunity to focus on engagement – and importantly rebuild trust with members.
Default insurance has provided an important safety net for so many Australians over the last few decades. Without having a strong understanding and connection to insurance, those under 25 could be inadvertently giving up something (life insurance) that could have a profound impact on their life. Unintended consequences of no life insurance cover may see the financial burden of ill health or injury fall on families.
We know that insurance can be complicated. But we need to get better at educating and supporting the financial health of members – and doing this in a simpler and more transparent way.
By engaging with young people early in their lives, they will have a stronger financial awareness and understanding, and see the value of insurance in super. For young people insurance is one of the most important parts of super – as ill health or injury can strike at any time, and saving for retirement seems like a long way away for those who are under 40 years old.
Financial education can help people make better financial decisions and give them the tools to know what to put in place if they find they can’t work, pay their bills or support their family if they get sick or injured.
The upcoming regulatory changes will see their safety net be taken away and it is essential that members understand the risks and accept the risks if they don’t have insurance.
I believe in the benefits of life insurance in super.
The opt‐out system can be improved, and we support making opting out of life insurance easier for members. MLC Life Insurance’s LifeView portal gives superfund members the opportunity to opt out online. The portal offers tools to help members better understand what they are covered for, including a needs analysis tool to check the level of their cover and a premium calculator to check the cost of their cover.
We believe that improvements in member engagement and education will ensure that those who opt out will do so with the full understanding of the consequence of this decision.
We work with our superfund clients to educate members on the importance of ensuring that their health and financial future is adequately protected.
With many people losing trust in insurance and super, we can help set people up so they can be financially resilient and, in effect, approach their finances in the same way they approach their health – looking after themselves from an early age and reviewing their finances regularly so they can stay financially fit for the long term.
As a mum of two kids under 25, I can see the benefits of building financial knowledge and resilience early.
It is the seeds that you sow early, such as good financial habits, that will set people up to reap the long term rewards – financial security and protection.
Life insurance and superfunds must to work together to engage differently with members. Providing financial education can create healthy financial habits and add value to meet members’ needs as the sector changes.
Chief Customer Officer, Group Insurance