Underinsurance could take its toll on the community of Sydney, Australia
It concerns me that many residents in Sydney and through out Australia for that matter do not have enough life insurance to sustain their current lifestyle if misfortune was to impact their family.
A recent survey conducted for the Investment and Financial Services Association by Rice Walker found that only 4% of those with dependants have sufficient life insurance. This has the potential to greatly affect families who aren’t covered if one parent were to die .
Sufficient life insurance is generally accepted to be at least 10 times the insured’s earnings. But alarmingly, six in ten people with dependants don’t have enough life insurance cover to look after their loved ones for more than one year if they were to die.
Having been in the finance industry for a number years, I believe these alarming results could be due to a lack of awareness about the types of life insurance solutions available and the cost of purchasing cover.
Many people insure their home and their car, but fail to insure their most important asset, their ability to produce an income, which is also their life. People fail to realise the value of their ‘working’ life. It supplies the capital that fuels the lifestyle that you and your family enjoy, not just now, but well into the future.
Who wants to be a millionaire?
Even an annual income of $30,000 today is potentially worth more than $1 million in 20 years time. Imagine no longer having access to that potential income, which is so vital to you and your family.
So, why aren’t people insuring their lives and their ability to provide for their families?
I believe it is time to dispel some of the myths around insurance and to highlight not only just how affordable insurance premiums are, but also how invaluable insurance benefits are.
Many people are surprised to learn just how affordable life insurance is. Some types of life insurance are available from as little as 70c per day. With one large insurer in Australia, $1 per day buys a 35 year old female $901,743 of Term Life cover and a 35 year old male $551,064 of Term Life insurance. Term Life cover pays a lump sum if the insured dies or is diagnosed as terminally ill.
But if you really want to put a dollar value on your health, think about the costs involved when you don’t have insurance. A cancer patient, on average, is admitted to hospital 5 times, uses outpatient and accident and emergency services 21 times, visits a GP 26 times, uses medical services outside hospital 36 times and has 14 prescriptions filled . A year’s supply of some cancer drugs can cost up to $60,000 a year.
I would recommend anyone – particularly those with dependants – who does not currently hold some type of life insurance cover to ask their financial adviser for a comprehensive risk management assessment. Those with life insurance, but who have not updated their policy recently are also at risk. Life changes such as marriage, the birth of a child, or purchase of a house all impact your life insurance needs.
Insuring and protecting yourself, and your loved ones, from financial hardship is one of the easiest steps you can take to ensure that misfortune does not impact those who depend on you.
References:
1. IFSA-Rice Walker Fast Facts: a nation exposed!
2. IFSA-Rice Walker Fast Facts: a nation exposed!
3. ‘Health system expenditures on cancer and other neoplasms in Australia 2000-2001’ Health and welfare expenditure series no 22, Australian Institute of Health and Welfare May 2005, www.aihw.gov.au
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November 2007
