Buying personal insurance products can involve difficult decisions, as it means considering such uncomfortable circumstances as death, terminal and/or prolonged illness, or total and permanent disability. Our understanding of personal insurance decisions as they relate to life insurance (death component), income protection, total and permanent disability, and trauma insurance is very limited. This article reports on an Australian study of the levels of personal insurance literacy among the general public, which it compares to how confident they feel about their understanding of personal insurance products and the adequacy of their personal insurance cover. The insurance literacy levels are also compared to the actual amount of personal insurance individuals hold. The results show some people are overconfident about their understanding of personal insurance, or believe they have sufficient cover when in reality this is not the case. The findings suggest that people’s insurance literacy is related to their confidence about personal insurance as well as the amount of personal insurance they have.
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Driver et al. (2024) studied this question.
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