Australian Underinsurance: One in two industry fund members are underinsured by $100,000 or more
Fri, 17 Jun 2011
Australian Underinsurance: The Cold Hard Facts
- Only 31% of Australians insurance their ability to earn an income with income protection insurance. (source: Investigating Income Protection Insurance in Australia, TNS/IFSA, July 2006)
- The average insurance claim paid outside of super is $132,537, while the average claim paid from an employer default fund is only $70,000. (source: Underinsurance Project, IFSA/KPMG, May 2005)
- 62% of people with life insurance exclusively through super accepted the default amount of life cover. (source: Life Broker Life Insurance Report, Sweeney Research, 2010)
- Life Insurance cover provided within super is only about 20% of what is required. (source: Rice Warner Actuaries)
- One in two industry fund members are underinsured by $100,000 or more. (source: AIST media release, June 2008)
- Nearly 50% of Australians said they/their family would not cope financially in the event of their premature death or if an illness or injury stopped them earning an income for more than 3 months and they had to bear the entire costs themselves. (source: Life Broker Life Insurance Report, Sweeney Research, 2010)
What do these figures mean? Default insurance within superannuation is a good basic safety net for a member, but it usually provides inadequate cover.
The best outcome will always come from tailored advice from a licensed Financial Advisor.
Advisors develop a deep understanding of clients personal circumstances and are therefore best placed to ensure a clients personal protection needs are met.
Uptake of insurance in Australia The research confirmed other studies that show Australians are significantly underinsured when it comes to life insurance and income protection insurance. Uptake ratios for life and income protection insurance fall well below those for car/home and health insurances. Q. Which of the following types of insurance do you currently have? Figure 1 - proportion of respondents with different types of insurance While some respondents hold life and income insurance within super, between half and two-thirds of these people accepted the default level of insurance which is typically very low. Uptake of life insurance is higher among: Males and females aged 40-54 and non-singles Those with a mortgage and households with a pre-tax income of $125,000 or higher Uptake of income protection insurance is higher among: Males and females aged under 55 Those with a mortgage and households with a pre-tax income of $125,000 or higher.
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Tags: Underinsurance Insurance Life Insurance Truama Cover Income Protection TPD Aggred Value Indemnity
