Risk insurance for Australia’s fund management market will grow to $21.5 billion from the current $10 billion over the next 15 years as more people seek to protect their future income, says actuaries Rice Warner.
The average level of income protection per working person in Australia is currently 15 percent of earnings, according to Rice Warner. Many recommend a target of 85 percent of income. Life insurance typically pays 3.4 years of income in Australia on death, says Rice Warner. Many recommend 10 years or more.
“Business sold through industry funds and employer master trusts will be the fastest growing segment of the risk insurance market,” says Rice Warner in a statement.
Risk insurance may be paid as a lump sum, used for income protection or paid in the event of total and permanent disability. Superannuation funds, say Rice Warner, may engage their members more in conversations about insurance needs.
In 10 years Australia’s superannuation funds are likely to be managing $2.9 trillion compared with $1.3 trillion today, says Rice Warner. In 2030 the Financial Services Council expects Australia’s fund managers to have about $5 trillion in assets under management.