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Fact File

The Myths about Life Insurance

“The life insurance in my super is enough.”
“ Insurance Premiums are too expensive.”
“ I don’t work, so I don’t need insurance”
“ I’m young, healthy and debt free – I’ll wait till I need insurance”
“ Insurance Companies don’t pay when the time comes.”

“The life insurance in my super is enough.”
Most Australians have life insurance only through their superannuation. You may be surprised at how little this amount of cover really is.

Research shows that almost half of industry super fund members are underinsured by $100,000 for death cover and by $1,000 per month for income protection. These are frightening statistics when you consider that many Australians only hold their insurance through their Super.

Some risks cannot be covered through your superannuation. In particular critical illness or trauma insurance is not available via superannuation.

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“ Insurance Premiums are too expensive.”
You can insure against death or disability for a fraction of 1% of the amount insured. There is no question of the value in transferring the risk of critical events to the insurance company.

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“ I don’t work, so I don’t need insurance”
Some people may think – “I’m a full-time parent, I don’t need life insurance”. What most families don’t realise is that if the main homemaker isn’t around, their family would require a lot of assistance, both emotionally and financially.

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The effect on the primary breadwinner may be devastating. They may have to reduce working hours or employ outside help. According to the report “Australian mothers – undervalued and underinsured” from IFSA, October 2005, families losing stay-at-home parents can require more than $75,000 per year for child care or home help expenses.

“ I’m young, healthy and debt free – I’ll wait till I need insurance”
A young person’s most valuable asset is their ability to earn income. Regardless of debt and or age, it makes sense that insurance is an integral part in their life. What would happen if your ability to work was affected by disablement of serious illness. In particular, income protection, disability and trauma cover need to be considered. When you are older, you may be limited as to what sort of insurance you can obtain. Being left from any age on a minimum pension is a frightening thought.

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“ Insurance Companies don’t pay when the time comes.”
Publicly available data reveals that life insurance companies have paid a total of $265 billion in claims and retirement benefits between 2000 to 2007. (APRA Life Insurance Trends, March 2007).

Did you know

Source: CommInsure, 23/1/2008

 

What Are Your Chances

Event A car being stolen and not recovered? Having to claim on a home &/or contents policy? Becoming disabled for more than 3 months before age 65 and having no income? Suffering from cancer before the age of 75?
Likelihood Chance of this occurring:

1 in 800

Chance of this occurring:

1 in 13

Chance of this occurring:

1 in 3

Chance of this occurring:

1 in 3 for men,
1 in 4 for women

Cost to
Mitigate Risk
Average full comprehensive premium:

$1,406 per annum

Average $250,000 Home/Buildings Cover and $50,000 Contents Cover:

$780 per annum

Income Protection Plus for 35 year old male earning $50,000:

$490 per annum

$250,000 Trauma Cover Benefit for 35 year old male:

$601 per annum

Source: Westpac Insurance 2010