What’s worth more – your belongings or your livelihood?

At least one in five of us will be unable to work due to injury or illness in our lifetime, yet we’re still more likely to insure our car than our most important asset–ourselves.

You might have the attitude ‘she’ll be right’ but looking at the statistics, there is more chance of something going wrong than you might think.

Over 80% of Australians insure their car but less than a third of us have income insurance should we have an accident and be unable to work¹.

How invincible are we really?

It’s estimated that at least one in five Australians between the ages of 21 and 64 will be incapable of working at some point due to an unforeseen accident, injury or illness².

Despite this, almost 95% of the population is underinsured, meaning we could be setting ourselves up for real financial difficulties should something happen³.

Here are some national figures to put it into perspective:

• Every year 236,000 people of working age suffer a serious injury or illness⁴
• 18 families in Australia lose a working parent every day of the week⁵
• 50,000 Australians have heart attacks every year⁶
• One third of women and a quarter of all men are diagnosed with cancer⁷
• More than 1,600 people die on Australian roads every year, most aged 26 to 59⁸
• A stroke occurs every 12 minutes across the country⁹.

Debunking the myths

The national Lifewise campaign set the record straight on a number of misconceptions believed to be part of the reason behind why Australia is underinsured as a nation. These include:

1. The government will look after me if something happens
   Centrelink pays benefits, but it might not be enough to cover your current lifestyle.
2. Workers’ compensation will cover me
   This only covers incidents that occur during work hours or illnesses that are a direct result of your employment.
3. Life insurance is not affordable
   For most Australians insurance is affordable and can be paid via monthly premiums. If you want a quick estimate, AMP’s online calculator can help you crunch the numbers.
4. Life insurance companies don’t pay claims
   Insurers pay out almost $10 million every working day in claims.
5. I’ve already got enough insurance
   Research shows 60% of families with dependent children don’t have enough insurance to cover household expenses for a year if the family bread winner were to pass away.

What types of cover are available?

Insuring yourself and your income can allow you to maintain your lifestyle and living arrangements, and give you comfort in knowing you can still meet your financial commitments—things like mortgage, rent, card repayments, bills, kids’ education fees, and treatment and rehabilitation costs should you need it.

You can buy different forms of personal insurance through your super fund or via an insurance company. Here’s a rundown of the four main types of cover available:

• Life insurance pays a lump sum on your death or the diagnosis of a terminal illness
• Trauma insurance pays a lump sum on the diagnosis or occurrence of a specific illness
• Income protection provides a replacement income of up to 75% of your regular income if you’re unable to work due to illness or injury
• Total and permanent disability (TPD) pays a lump sum if you become disabled and are unable to ever work again.

What AMP’s doing in this space?

In 2014, AMP paid more than $887.6 million in claims across its life, trauma, income protection and TPD policies. The age range of those making a claim varied from six years old to 88 years old.

The important thing to understand is why insurance might be necessary for your situation, whether that includes a partner or children, and how much you need so you are not under or over insured.

For further information

• AMP’s online calculators can help you estimate how much insurance costs and how much insurance you need and for further information – videos and information.

¹ www.lifewise.org.au/facts-research#sthash.fSaAIgeC.dpuf
² www.lifeinsurancefinder.com.au/post/compare-life-insurance-australia/the-impacts-of-underinsurance-in-australia/
³ www.lifeinsurancefinder.com.au/post/compare-life-insurance-australia/the-impacts-of-underinsurance-in-australia/
⁴ www.lifeinsurancefinder.com.au/post/compare-life-insurance-australia/the-impacts-of-underinsurance-in-australia/
⁵ www.lifeinsurancefinder.com.au/post/compare-life-insurance-australia/the-impacts-of-underinsurance-in-australia/
⁶ www.lifewise.org.au/insurance-101/understanding-the-risks
⁷ www.lifewise.org.au/insurance-101/understanding-the-risks
⁸ www.lifewise.org.au/insurance-101/understanding-the-risks
⁹ www.lifewise.org.au/insurance-101/understanding-the-risks

Online source: Produced by AMP Life Limited and published on 4 March 2016. Original article.

Important information © AMP Life Limited. This provides general information and hasn’t taken your circumstances into account. It’s important to consider your particular circumstances before deciding what’s right for you. Although the information is from sources considered reliable, AMP does not guarantee that it is accurate or complete. You should not rely upon it and should seek qualified advice before making any investment decision. Except where liability under any statute cannot be excluded, AMP does not accept any liability (whether under contract, tort or otherwise) for any resulting loss or damage of the reader or any other person

Need help?

Speak to us today.