Do you have enough life insurance cover?
Research commissioned by NobleOak in December 2017 shows that 45% of Australians have no Life insurance, and those who do have cover may not have enough or the right type.
Surprisingly it’s people aged 55-60 who are more likely not to have cover (58%) and are male (57%). The reasons for not having Life insurance are varied and include a lack of trust that a claim will be paid and people thinking they will never need it.
But what would you do if something happened and you couldn’t work? It seems that many people underestimate the impact of an adverse event such as a sudden death or injury preventing them from working. The financial consequences could be devastating at a time of great emotional stress.
The issue of underinsurance is highlighted in the Rice Warner Underinsurance in Australia 2015 report which shows only 42% of Australians have enough life cover to offer their families the equivalent standard of living. Worryingly, the median level of Life cover in Australia would meet only 61% of basic needs and 37% of income replacement needs.
Tips to ensuring you’re not underinsured
If you already have Life insurance or are thinking about taking out cover you need to do your homework. It can be easy to buy cover because it’s cheap, but this doesn’t mean it’s the best cover for your particular circumstances.
There are a lot of resources such as online calculators available to help you work out what type and level of cover you need.
Many people think that if they have Life insurance inside their super, they’re adequately covered. This is often not the case.
You should also remember that you can’t get Trauma cover inside your super. Also known as critical illness insurance, trauma cover provides a lump sum when you’re injured or contract a serious illness such as cancer, heart attack or stroke.
Ask yourself, is your cover adequate enough to provide you with the same standard of living if you had to make a claim? If the answer is ‘No’, then think about topping up your cover outside super. Cover held outside super may offer more opportunity to tailor levels and types of cover to suit your individual needs.
Review your cover annually. Whilst it’s easy to ‘set and forget’ and automatically renew your cover each year, you should take the time to review it to make sure it still meets your needs, particularly if your circumstances have changed such as getting married or buying a new home.
Lastly, read the Product Disclosure Statement (PDS) to make sure you know what you are, and are not, covered for. Most direct policies that don’t include many health questions when you apply often have pre-existing clauses that may result in your claim being delayed or even declined.
Pureprofile Research December 2017