Why Get Life Insurance?

Could this be you?

Each year thousands of Australians are injured, suffer a serious illness or die unexpectedly. Statistics from the Australian Institute of Health and Welfare show that 1 in 3 men and 1 in 4 women will be diagnosed with a malignant cancer before the age of 75.

If this happened in your family would you be able to afford:

• The monthly mortgage payment?
• Continuing education expenses?
• The cost of additional home help?
• The living expenses of your current lifestyle?
• Sufficient retirement savings?

The loss of family income and increased medical costs may force the sale of the family home, the sale of other assets or the running down of savings. Your hopes of giving your children the right start in life may be dashed. Your family may no longer be able to afford life's little luxuries. Insurance can help you to protect against such a scenario.

When should you consider insurance?

Any time is a good time to review your personal situation. However there are certain events during life which should prompt consideration of Cover such as:

• Getting married
• Having children
• Buying property or any other asset involving debt
• Starting your own business
• Setting up a Self Managed Super Fund
• Putting together a Financial Plan

You should review your insurance needs at least annually to take account of changes in your circumstances. Use our Insurance Needs Calculator to estimate your insurance requirements.

Are you one of the many under insured in Australia?

Most young adults in Australia appear to be viewing the prospect of purchasing life insurance as something to merely worry about when they “get older”. The misconception being that an individual in their 20s or 30s is too many years away from their eventual death that they needn’t worry about financially protecting their spouse or dependants.

Of course, the whole point of life insurance is preparing for events unforseen or unexpected, no matter how unlikely or unpleasant and as recent research has identified, Australians seem content leaving themselves open to this sort of risk in a way that they would never consider when protecting against damage to or loss of their automobiles or homes.

The Australian Securities and Investments Commission (ASIC) recently found that up to 81% of Australians are underinsured. Similarly the Australian Bureau of Statistics (ABS) recently revealed that on average, 12 parents of dependent children die every day in Australia and of these, only 4% will have sufficient life insurance to assist their families.

This means that, each year in Australia, roughly 4,200 parents leave their families exposed to financial ruin in the event of an accident or illness leading to death or permanent disablement. Many Australian families would not receive a large enough payout to Cover even a year’s income. When considering Australia as a whole, it is estimated that the level of under-insurance for parents with dependant children is somewhere in the vicinity of $1.370 billion.

The growing popularity in Australians investing in their superannuation has only worsened this problem, with the further misconception that the life insurance component included within most superannuation policies is sufficient Cover to protect the needs of most families in the event of death or disability to the main breadwinner. Research has shown that the average worker in Australia would not have more than $70,000 in life insurance Cover through their superannuation fund, a figure that is a far cry from the $500-600,000 that financial experts estimate would be required for families with young children to maintain their lifestyle and needs.

Interestingly we are not alone in Australia. A US Study conducted by the Department of Housing & Urban Development in 2005 found that for every home lost through fire, another 3 homes will be lost due to death and a staggering 48 homes will be lost due to disability. This is because the temporary or permanent loss of a breadwinner often results in an inability to meet home loan commitments, forcing the sale of the family home.

Clearly, life insurance is not only for the elderly to consider. On the contrary, an individual with a young family or spouse is a prime candidate for life and income protection insurance. The team at HelpMeChoose.com.au strongly suggest that you seek advice from a licensed insurance broker or financial advisor prior to making any decisions in this regard.