New report calls for enhanced financial advice

New report calls for enhanced financial advice | Insurance Business Australia

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New report calls for enhanced financial advice

Rising costs, mental health pressures take toll

Insurance News

By
Jonalyn Cueto

Australian workers are increasingly in need of accessible financial advice to manage their future amidst rising living costs and mental health pressures, according to a new report.

The inaugural “State of Australia’s Safety Net” report, commissioned by the Council of Australian Life Insurers (CALI), examines the financial and personal challenges faced by over 5,000 Australian workers. The study highlighted a significant gap in the financial advice available to young adults (18-34 years), women, and mid-career professionals (35-54 years).

“This report shows that rising cost of living, increasing mental health challenges and global economic shocks are putting intense pressure on Australians. They need someone to talk to about their financial future now more than ever,” said CALI CEO Christine Cupitt.

The research, independently conducted by agency 89 Degrees East and led by renowned social researcher Dr Rebecca Huntley, revealed that more than two-thirds of Australian workers worry that cost of living pressures will hinder their ability to afford life insurance in the future.

“Our findings show that most Australians, regardless of their age, aspire to be more financially resilient, and this is only becoming more important for them in a cost of living crisis,” Huntley said. “Higher living costs and the uncertain economic environment have led to increased stress levels and concern about mental health in our community.”

The report emphasised that mental health challenges can significantly impact personal finances due to time off work and the costs associated with treatment and support. Life insurers are currently the second-largest provider of financial support for mental health issues, following the Federal Government.

Challenges in finding support

Despite the importance of life insurance, almost 90% of Australians believe it is crucial to access financial support through their insurer for mental health-related work absences. However, only one-third would turn to their insurer for assistance, preferring instead to seek help from family, friends, or government payments.

Cupitt highlighted the role of life insurers in providing a safety net and ensuring financial security. Last year, over 91,000 Australians or their families received more than $12 billion in financial support from life insurers. Nevertheless, the report points out a growing issue of underinsurance, with over 3 million people lacking adequate protection.

The report calls for the passage of tranche two of the federal government’s Delivering Better Financial Outcomes legislation, which would enable life insurers to offer straightforward advice on their own products when requested by customers.

“This report shows that young Australians, mid-career workers and women in particular want to learn more about what’s out there to help protect them,” Cupitt said. “They’re under pressure at work and at home, they’re worried about the cost of living, and they’re intrigued by the possibility of safety nets to increase their financial resilience and overall wellbeing.”

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