Where do all the life insurance premiums go?

According to the FSC, annual premiums paid for life and accidental death cover (excluding Group Life) for the year to March 31, 2026 amounted to $1.64 billion.  For the same period, income protection premiums amounted to just $539 million.

Why are life cover premiums three times that of income protection. What does this tell us?

1. Life cover premium rates are higher than income protection premiums?  They might be, but probably not three times more expensive.
2. Many more people have life cover than income protection?  This is likely correct, but one would imagine the vast majority of people who have anything other than relatively small life cover sums insured are probably of working age (and who have incomes to protect).  This suggests a lot of people who have life cover don’t have income protection - a big opportunity for advisers. (Previous FSC research corroborates this).

Interestingly, for the same period, trauma cover premiums amounted to $672 million. Why is this less than half of life cover premiums? Is it because:

1. Life cover premium rates are much higher than trauma cover premiums?  I’d say overall, that’s probably not the reason.
2. Fewer people have trauma cover than life cover?  This is probably true – a potentially big opportunity for advisers.  Don’t all people need trauma cover?
3. Trauma cover sums insured are lower than life cover sums insured?  This is probably correct. Trauma cover sums insured are relatively low, and I suspect most people are significantly underinsured (something that can no longer be blamed on affordability alone).  Another opportunity for advisers.

For the same period, TPD premiums amount to just $89 million. This seems low considering never being able to work again is probably the biggest financial risk facing working age people still more than a few years from retirement.  Why might this be?