A recent study from the Council of Australian Life Insurers (CALI) has highlighted a significant gap in life insurance advice for Australians under 35.
The findings indicated that nearly half (49%) of individuals aged 18 to 34 are seeking financial advice, particularly on life insurance matters, but only a small fraction receive professional guidance.
CALI’s research showed that while 49% of young adults are interested in obtaining financial advice, only 11% have actually accessed such services.
CALI CEO Christine Cupitt said that although many young Australians are eager to make informed choices about their finances, professional advice remains largely inaccessible for this demographic.
“We have a growing generation of Australians who are motivated to make smart financial decisions, but for many, professional advice is out of reach,” she said. “We need to be able to offer affordable, timely, and personalised support. That’s what the government’s Delivering Better Financial Outcomes reforms are all about, and it’s critical they stay on track.”
The study found a preference among younger Australians for advice tailored to their individual needs.
More than half of respondents in the 18-34 age group indicated they want guidance that helps them determine the appropriate level of life insurance cover, compared to a minority who are satisfied with general information.
Key life events – such as changes in financial status, experiencing health issues, or seeing family members face illness – were identified as primary motivators for considering life insurance.
Cupitt said these moments often prompt individuals to reassess their financial protection and consider their options for securing a safety net.
“These are real-life decisions being made at real-life turning points,” she said. “Whether it’s a health scare or witnessing a loved one go through something difficult, these moments prompt people to think about their own financial safety net.”
With professional advice out of reach for many, younger Australians are turning to informal sources.
According to CALI, 41% rely on advice from friends and family, 20% consult social media, and 34% use online forums.
Cupitt noted that this trend means many are piecing together information from a variety of sources, which may not always be accurate or tailored to their circumstances.
“Instead of getting help from a qualified adviser, younger Australians are piecing together advice from friends, Google searches, and TikTok videos – sources that aren’t always accurate, tailored, or in their best interests,” she said.
Despite the challenges, financial advisers remain positive about the outlook for life insurance.
CALI’s research indicated that 82% of advisers expect life insurance to become a larger component of their business in the next five years.
This anticipated growth is attributed to factors such as increased demand from younger consumers, intergenerational wealth transfers, larger home loans, and a shrinking pool of advisers.
CALI has advocated for regulatory changes to expand access to advice. The organisation supports the introduction of a new adviser classification that would allow for limited advice on life insurance products.
Cupitt said this move could help bridge the advice gap and provide a pathway for new professionals to enter the field.
“The Federal Government’s introduction of a new class of adviser would be a win-win for all Australians by increasing access to advice while providing a clear pathway for those looking to enter the advice industry,” she said.
Currently, Australian law restricts life insurers from providing personal advice directly to customers.
However, government reforms announced in December 2024 are set to change this, enabling insurers to offer basic advice at no additional cost when requested.
Cupitt said that while the commitment to reform is welcome, further action is needed to ensure younger Australians can access the support required to build adequate financial protection.
“Younger Australians deserve support and advice to build the right safety net and have peace of mind about their future. We welcome the government’s commitment to reform, but action is needed now to close the gap between demand and delivery of financial advice,” she said.
The significant gap in life insurance advice has been highlighted as Australian life insurers are under increased regulatory scrutiny following a joint review by the Australian Securities and Investments Commission (ASIC) and the Australian Prudential Regulation Authority (APRA).
The review, which began in late 2022, was initiated in response to rising policyholder complaints about unpredictable premium increases.
The regulators found that repeated and sometimes substantial premium hikes were not always consistent with policy contracts or customer expectations.
Products marketed as “level premium” were identified as a particular source of confusion, with many consumers unclear about how these premiums function.
By the end of 2024, Australians were spending around $9.4 billion annually on individually held life insurance obtained through advisers.
Insurers have attributed recent premium increases to factors including age-based adjustments, cover indexation, and changes to base rates.
