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Life insurers next to target young market

Moves by New Zealand’s health insurers to attract younger consumers are likely to be followed by the life insurance industry, commentators say.

Wednesday, February 12th 2014, 6:00AM

by Niko Kloeten

As reported by Good Returns, New Zealand’s largest health insurer Southern Cross is targeting young people with a new low-cost product, which is available via a mobile app.

Peter Neilson, chief executive of the Financial Services Council, said life insurers were also working on ways to market to younger consumers.

He said a number of major insurers were working on apps to increase their appeal to this market.

“Horizon Research recently found that people who watch the TV news are using an average of 2.5 devices, including their iPod and phone.  That’s part of how the marketplace has changed.

“Also, the buying style has moved.  People come to the conclusion of having a need, then they scope out what’s available from a variety of places, then they buy on price, often by-passing advisers.

“Ten to 15 years ago having your own website was a necessity but now more people are likely to be using a mobile phone rather than a PC or laptop.”

Insurance researcher and industry commentator Russell Hutchinson said there were some important differences between life and health insurance.

“A big proportion of that uninsured population would like to have it if it was more affordable.  There may be other different ways to deliver an affordable product,” he said.

“With life insurance it’s a bit the other way around; 70% of the population does have some life insurance but virtually all of them don’t have enough.  It’s a more complicated pitch than 'here, buy some insurance, it’s cheap'."

Hutchinson said one product that could be marketed better to young people was income protection insurance, which a recent Massey University study found only one in five New Zealanders have.

“If you’ve got a young couple aged 18, the risk one of them will die in their working life is 17%, while the risk one of them will become temporarily disabled is 27%.  That takes it from about a one in six chance to one in four, which is a huge difference. 

“A lot of disabilities tend to occur not in people’s 20s but in their 30s, 40s and 50s.  The problem is you don’t know which one you are.  If you are playing a game of waiting to get insurance cover you might lose.”

Niko Kloeten can be contacted at niko@goodreturns.co.nz

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