People with a strong understanding of life insurance are more likely to buy it, according to James Cook University researchers, who have called for more financial literacy education.

Despite the advantages for people with dependants and debt, there has been little increase in personal cover uptake over recent years, financial planning lecturer Tania Driver says.

She and associate professor Monica Jurin surveyed more than 450 people about life, total and permanent disability, trauma and income protection covers, examining the relationship between insurance literacy, perceived understanding and actual knowledge.

They found people’s “perception of their own understanding was more strongly associated with their insurance holdings than their formal insurance literacy”.

“This suggests that awareness and confidence in understanding insurance products may play a greater role in whether people hold cover than their measured knowledge alone,” Dr Driver said.

Greater attention should be given in schools to financial and insurance literacy, the researchers say.

They also investigated whether people who hold cover in superannuation do so by default only or are engaged with the product.

“Our findings show these people are actively involved with the cost, cash flow and administrative processes of insurance, rather than holding it by default,” Dr Driver said.