Living through COVID-19 has brought many challenges and shifting priorities as we deal with the financial impacts of the pandemic, and that includes the issue of life insurance. 

On the one hand, the pandemic has highlighted the importance of life cover. On the other, those who may have lost a job or lost income are questioning its necessity. 

Many Australians continue to view life insurance as a discretionary item. This is in stark contrast to car or home insurance which are seen as necessities. It seems we are willing to insure our property but not the thing that matters most – our life and our ability to earn an income. 

CONFLICTING PRIORITIES

A survey by KPMG found that only 35 per cent of Australians thought life insurance was essential and just 30 per cent believed they needed income protection. But when it comes to car insurance, 79 per cent viewed cover as essential and yet, during COVID-19, car usage reduced as many were working from home and restricting their movements. 

As the COVID-19 health crisis has reinforced our vulnerability in terms of health and the fragility of life, the need for life and income protection insurance has probably never been greater. 

What would happen if you became too sick to return to work or if you passed away? Who would pay the mortgage, living costs, health insurance and utility bills for you or the family you left behind? For those with outstanding debt and dependants, life insurance will always be an important consideration. 

It should also be remembered that the current health crisis does not rule out people getting sick with other illnesses, some linked to COVID-19 and some not. Mental health is one these health issues and is becoming increasingly prevalent. 

CLAIMS ON THE RISE

In the June quarter, the life insurance industry reported a net after-tax loss of $179 million on its individual income protection products, driven largely by claims for mental health issues in the wake of COVID-19. Mental health claims are expected to grow even further as it is thought most people take more than a year to report such issues. 

With claims on the uptick, this has meant the insurance industry is either looking to increase premiums or already has. This, in turn, may discourage people from keeping their cover. 

Indeed, the KPMG survey said that 38 per cent of policy holders were looking to cancel their income protection insurance in the next 12 months, and 25 per cent were planning to drop life cover. 

On the plus side, many Australians have some level of life and income protection insurance in their super. However, if you were to lose your job, then paying premiums on your insurance in super would come out of your fund balance, reducing your retirement savings over time. 

Also, your insurance might well cease when you lose your job unless you opt to take out a private policy. You generally have 60 days to take up this option. 

REDUNDANCY PAYMENTS

If your income protection insurance is outside super, then be mindful that not all policies include redundancy claims. And those that do may have restrictions. For instance, there is usually a wait period of up to 28 days before any payments will be made. 

If you are thinking of taking out a policy now to cover you in case of redundancy given the current economic environment, then you will probably have to go through a six-month no-claim period before you can benefit. During that six-month period, there must be no indication from your employer that redundancy may be on the cards. 

Many insurance companies recognise the financial and personal difficulties many people currently face and some have offered to reduce or even suspend premiums without any loss of continuity to your policy. 

One alternative may be to look at reducing the cover you have so that your premiums reduce. But it’s important to be mindful of your needs and ensure you have adequate cover. 

THE ROAD AHEAD

The insurance industry, like many others, is being forced to look at a different way of doing business in a post-COVID-19 world, with simpler policies and flat premiums all being discussed. 

In the meantime, making quick decisions on whether you still need insurance, or your current level of insurance, may prove a mistake. If you are thinking about altering your cover, give us a call first to discuss your insurance needs. 

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There’s no doubt we live in a curated world. Online algorithms serve up content designed to meet our needs based on what we’ve liked and engaged with in the past. And while this can help us find what we’re looking for, the problem is that while these algorithms reflect our interests, they also reinforce them. 

As a result, we see little of what’s different and unfamiliar – our beliefs are unchallenged and our biases strengthened. 

Thankfully with a little awareness we can break out of our respective bubbles and gain a fresh perspective. 

THE IMPACT OF ONLINE ALGORITHMS

Online algorithms can save us time searching for the information we are after. They can seemingly anticipate our needs before we even know we have them, for instance, presenting us with an ad for contact lens refills just before you run out, or a reminder to get a health check based on your age and gender. 

Yet there is a more serious impact as well, as evident in The Wall Street Journal’s 2016 US politics experiment where they created a blue (liberal) and red (conservative) Facebook feed side-by-side.ⁱ This illustrated just how dissimilar reality is for different Facebook users, and offered a rare side-by-side look at real conversations from different perspectives. 

Algorithms can reinforce biases, which Amazon discovered when its hiring tool chose candidates based on their use of certain phrases more commonly associated with men.ⁱⁱ This lack of gender-neutrality in hiring meant that female candidates would miss on opportunities due to the system’s algorithm. 

BEING AWARE

Back in 2015, a study found that 62.5% of respondents were unaware that Facebook curated its news feed to present content based on user’s interests.ⁱⁱⁱ These ‘filter bubbles’ have since been identified as problematic, with Bill Gates speaking out about them several years ago.^iv Living in these bubbles makes it easy to forget that not everyone thinks the way we do, which can increase polarisation. 

We now have a better grasp of the powers of algorithms and how they can warp our online experiences. This awareness means we can more critically think about what we are presented with and look beyond our feeds to see what other views and opinions are out there. 

BROADEN YOUR HORIZONS

While our online experience may be narrowing our world view, if approached mindfully it can also provide access to an incredible range of social groups, conversations and opinions that may challenge our preconceived notions and broaden our horizons, if we seek them out. 

Read and watch a variety of news sources rather than just your one media outlet of choice. Try to access and appreciate both sides of an issue. Procon.org can help you there, as it presents opposing arguments to controversial issues. You can click on the ‘more issues’ tab to read through different takes on everything from politics and society, science and technology, health and medicine, and education. Each topic is split into pros and cons so you can decide for yourself what you believe after weighing up the arguments – perhaps you might even change your mind on some issues! 

Technology firms have even developed tools that adjust your ‘filter bubbles’ via sliders that control content filters.^v For instance, the “politics” slider ranges from “my perspective” to “lots of perspectives.” Choosing the latter end provides access to media outlets that would not normally be displayed in your feed. 

Then there are apps like Earbits, which allow users to discover new music by clicking on different genres, as opposed to music platforms that recognise your preferences and serve up more of what you already like. 

It’s about choosing to be active, curious and explorative in your online travels. After all, being exposed to new ideas is at the heart of learning, understanding and personal growth so resist going down that narrowing information highway. 

i http://graphics.wsj.com/blue-feed-red-feed/ 

ii https://www.reuters.com/article/us-amazon-com-jobs-automation-insight/amazon-scraps-secret-ai-recruiting-tool-that-showed-bias-against-women-idUSKCN1MK08G 

iii http://www-personal.umich.edu/~csandvig/research/Eslami_Algorithms_CHI15.pdf 

iv https://qz.com/913114/bill-gates-says-filter-bubbles-are-a-serious-problem-with-news/ 

v https://www.media.mit.edu/projects/gobo/overview/

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