A minimum commission to cover advisers’ costs and quicker application processes could widen access to life insurance for young people, according to Bombora Advice MD Niall McConville.

Older policyholders are increasingly opting out of cover and younger generations are not replacing them, threatening the industry’s long-term sustainability, he warns.

Previously, younger people bought into life insurance when taking out mortgages, but this mostly ended after the banking royal commission. Cost-of-living pressures also dampen demand.

Mr McConville says the industry has been slow to embrace technology that would make it faster and more convenient for younger people to buy cover.  

“At the moment, a 25-year-old is going to fill out the same paperwork and answer the same questions as a 55-year-old, when realistically a younger person is going to have much more straightforward life insurance needs and generally they will be a lot healthier.”

Specialist risk advisers are in high demand but cannot serve the entire market due to the financial strain created by the 60% cap on commissions, Mr McConville says. Many want to help young people buy lower-cost policies, but it is not financially viable.

The industry must find ways for young people to buy life insurance without going through the more costly personal advice process, he says.

Commissions could be changed, with a minimum sum to cover an adviser’s costs, but change will take time.

A collaborative approach to reform will be “absolutely essential”, Mr McConville says.