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Underinsurance could take its toll on
the community of Sydney
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 cover. 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
November 2007 Disclaimer
This material is of a
general nature only and has been prepared without taking
into account your objectives, financial situation or
needs. Before making a decision based on this material,
you should consider the appropriateness of this material
in regards to your objectives, financial situation and
needs. We recommend that you speak to
an xLife risk advisor before you make any decision regarding life insurance. |
