Very few Australians fail to insure their car, their house or their home contents. Why then do so few of us adequately insure our lives and our incomes?
The harsh reality is that if the typical Australian family suffers a serious illness, injury or death of one income earning parent, they will lose half or more of their income – a devastating personal and financial situation.
We have known that Australians chronically underinsure their lives for some time.
Thirty-five per cent of working Australians have no disability insurance cover and 19 per cent of families have no life insurance protection at all.
The result of underinsurance is a terrible personal and economic cost for individuals, families and the government.
The cost to the government of welfare payments to households without adequate disability insurance is $304 billion per annum. And that’s just to provide a basic disability pension − not to replace people’s real income.
So why don’t people insure their lives the way they insure their car?
New research provides insights into what motivates people to take out life insurance and more importantly what motivates them to remain uninsured or underinsured.
The research shows that protecting their financial future is important for working age Australians with 19 out of 20 confirming it is a priority.
And less than half of Australians make a plan for events that would require life insurance.
Only one in four Australians understand that “life insurance” also means “income protection insurance”.
And a startling one in four believes that no-one needs income protection insurance.
There is a clear disconnect between recognising the potential for income loss and its implications, and taking action to protect against such income loss.
As a community, we can’t rely on “she’ll be right” and we’re not indestructible. We must change our attitude towards risk and insure our lives adequately.
