Facts About Life Insurance

Key Facts

  • Life insurance can be bundled to include Trauma and TPD cover.
  • Income protection is generally tax deductible.
  • Most super funds will provide a default level of life cover.

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Important Facts about Life Insurance that You Need to Know

Although Australians have close to a trillion dollars invested in superannuation, experts in the industry believe that their individual cover is generally inadequate. This particular belief is supported with the figures shown in the Lifewise/Natsem Under Insurance Report commissioned in 2010.

Research Undertaken on Families in their Thirties With Two Children.

The report undertaken by the University of Canberra was a hypothetically based case study of a couple in their 30s with two children. Both parents being in the paid workforce and what the effect would be on government services over the next ten years.

The situations that were looked at included what would happen if:

  1. The husband died prematurely
  2. The husband becoming temporarily unable to work
  3. The husband never being able to work again
  4. Wife dying prematurely
  5. Wife temporarily out of work
  6. Wife never being able to work again.

The report showed that in all cases under insurance was present to the level that it would put a financial strain on the families as well as services provided by government. In some cases the specific family would be forced to survive on less than half the original income they were accustomed to.

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Coverage is the amount of money that you will be paid in the event of a claim. An insurance consultant can help you determine an appropriate amount. Calculator
Provides a lump sum payment if you become totally and permanently disabled and are unable to return to work.
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Compare Life insurance quotes from these direct brands

Rates last updated November 24th, 2017
Name Product Maximum cover Maximum Entry Age Minimum Sum Insured Guaranteed Future Insurability Expiry Age Short Description
$15,000,000
69
$0
Yes
99
Get a quote for up to $15 million in life insurance cover. Cover can be tailored to meet your personal needs.
$1,500,000
65
$3,000
No
80
Flexible cover options to suit your budget. New eligible customers can receive 25,000 Velocity Points. Ends 31 Nov. Min monthly premium and T&Cs apply.
$1,500,000
65
$100,000
Yes
99
Receive a discount of 10% on life insurance as a Woolworths Rewards Member. T's and C's apply.
$2,000,000
59
$50,000
Yes
99
Get flexible life insurance up to the sum of $2,000,000.
$1,000,000
64
$100,000
No
99
Get a refund of 10% of the premiums you've paid (in the first 12 months) with The Real Reward™ .
$1,500,000
69
$0
Yes
99
A simple life insurance product that can offer up to $1,500,000 in a lump sum payment on death or diagnosis of terminal illness.

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Confronting Facts Revealed

Although it was acknowledged that many people are able to live out their lives without needing any assistance from life or disability insurance policies, or having to call on any government benefits, there are those that do. Some of the findings in the report are quite confronting, such as the following facts:

  • Of the 1,500 people who are killed on Australian roads annually the majority are aged between 26 and 59 years of age.
  • Although much is made of the fact that up to a third of Australians over the age or 45 retire early the majority do so because of ill health, not because they are financially independent.
  • Before reaching the age of 65, one in three employed people will be unable to work for three months or more as a result of injury or illness.
  • One in every four women and one in every six men will be off work for more than six months because of a disability during their working lives.
  • Deaths from cancer in 2010 totalled 43,000 in Australia as one in four women and one in three men will be diagnosed with the disease at some time during their lifetime.
  • The average Australian family requires 35.2 percent of their income to be put aside to pay their mortgage costs, and it takes an amount of around $310 a week to bring up two children.

Eye Opening Revelations

Further figures released in the report are quite eye opening in that they show the following events having occurred:

  • An incident that resulted in the actual death of one parent, an illness resulting in a parent being unable to work, or a serious accident, impacted on one in five families each year.
  • Half or more of a family's income is lost as a result of most accidents incurring a serious injury, a serious illness or the premature death of one parent, because of the family being under insured.
  • Those not having sufficient insurance to cover such disastrous situations account for a staggering 95 percent of families affected, If these levels of under-insurance are allowed to continue it will cost the Australian taxpayer $1.3 billion over the next 10 years in welfare and health costs.

Three Ways to Avoid Being One of the Statistics of the Future

The above figures can be turned around and a lot of financial suffering avoided if more people understood the following solutions are available to ensure your family is protected from becoming one of the above statistics:

  1. Income Protection Insurance. A cover that will pay you 75 percent of your taxable income should you need time off work as a result of injury or illness.
  1. Total and Permanent Disablement Insurance (trauma or living insurance). Will cover you for any big medical bills and lifestyle changes that will be required following a serious illness or injury.
  1. Life Insurance. Will pay a lump sum payment on the death of the insured person that can make up for the loss of the persons income. It is believed that a couple in their mid thirties with children will require an amount of 10 times their annual taxable income to be adequately covered against one or other of the partners dying prematurely.

Although a lot of reference is made about working couples, it should be kept in mind the enormous contribution a stay at home parent makes in the daily working of a family . If that person was not there it would involve a significant cost to the family budget having to have the day to day housework outsourced. For this reason the stay-at-home parent should also be covered.

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