The Internet has become the most popular source of life insurance advice by Australians, with a heavy reliance on family and friends, and advisers still playing a role for many, according to a study by life insurer NobleOak.
The insurer's “Life Insurance in Australia – Consumer Behaviour Transformation” research paper shows that when looking for advice on life insurance, 28.7% or respondents prefer using the Internet, 24.7% use a financial adviser, 21.9% use family members and 14.9% consult friends.
The study, conducted in December 2017, asked over 1,000 Australian adults aged between 30 and 60 years old about their research and buying behaviour with respect to financial service products, including life and income protection insurance, with a focus on the impact digital technology is having.
Other key findings outlined in the paper are:
- Customers are less willing to pay for financial advice. Greater access to online information and calculators has led to a more empowered consumer and is challenging people’s willingness to pay for financial advice. 55.9% of respondents are unwilling to pay anything for life insurance advice.
- Technology is making it harder for insurers to differentiate themselves. With the increasing use of digital technology when purchasing life insurance and as human interactions with insurers and advisers decline, products are becoming more commoditised. This diminishes the opportunity for insurers to differentiate from one another. 64% of respondents who would consider buying life insurance and income protection would buy it online or through a mobile device - if they needed it.
- Price is the key decision driver – in the absence of differentiation. Poorly differentiated products has resulted in price being the key decision driver. Cost of premiums was cited by 80.5% of respondents as one of the most important factors when purchasing life insurance. The key reason around 50% of respondents that have life insurance do not plan to renew their policy with their current insurer, is because it is “too expensive”.
- Switching behaviour is now more prevalent. With greater product commoditisation and a more empowered consumer, there has been a major increase in people choosing to switch life insurers. 24.6% of respondents in 2017 would consider reviewing their cover and/or insurer, compared to 19.5% in 2016.
- Certainty at claim time is more important than speed. The benefits of underwriting a policy upfront is valued by consumers, with a majority preferring to conduct a full health assessment than answer a few questions when applying for cover. 39% of people think it’s better to do a full health assessment, compared to 30% who say it’s better to only answer a few questions.
- Underinsurance continues to be a problem, with many Australians exposed. 29.1% of respondents would rely on friends and family, 22.1% would sell off assets and 15.2% would even sell their family home to help them cope financially if they contracted a major illness and couldn’t go back to work.