New research out of Australia finds that nearly half its population can’t afford to wait for default disability insurance, with women the most impacted.
The research, undertaken by MLC Life Insurance, found that overall 46% of Australian workers have three months’ or less savings in the event of a disability which prevents them from working, with almost a third of women only having one month’s savings.
MLC Life says the research challenges the current government-mandated default design of disability insurance to include only TPD “…showing that women are especially vulnerable to loss of income in an environment where TPD insurance requires claimants to sustain a total and permanent disability and sees individuals waiting an average of 2.5 years before they even lodge a claim”.
It says that while 22% of men have savings of less than a month, the same is true for 35% of women, demonstrating a 59% gap.
The company quotes research revealing that while 19% of Australian men have a savings buffer of two years or more, just 11% of women live with the same level of financial security.
The research explores the evolution of the product design of default TPD insurance. It shows Australians are overwhelmingly in favour of a new approach, with 57% preferring a steady stream of regular income over a lump sum payment in the event of illness or injury.
Kent Griffin, CEO at MLC Life, says the current approach to disability insurance in superannuation is centred on a binary assessment of total and permanent disability.
“…While it works for some, the evolving needs of members and changing nature of disability requires a debate about the most appropriate default disability insurance system that meets these needs,” he says.
Mark Puli, Chief Group Insurance Officer for MLC Life, says Australians revealed “…a clear preference for income stream alternatives to lump sum payments in the event of disability”.
The research was conducted by Freshwater Strategy for MLC Life Insurance. Click here for more information.