If you take a look at the numbers, one in five Australian families will suffer the death or serious injury or illness of a working parent. Not only is this emotionally devastating, but if you’re the one that’s left behind you’re facing an uphill battle when it comes to making those mortgage repayments.
According to research recently conducted by Lifewise, an initiative of the Australian life insurance industry , the underinsurance of parents with dependent children and a mortgage will cost the Australian Government an estimated $1.3bn in additional social security payments over the next decade. While it seems obvious to insure your house, your car, and even your health, insuring your life and loved ones against calamity appears to be deemed as unnecessary.
Lifebroker managing director Chris Eade believes the lack of insurance comes down to a misconception about cost. “Overestimating premiums was dissuading people from buying insurance, with 36% of respondents stating that the perceived expense was the major factor in their decision not to have life insurance,” says Eade.
However, Eade explains that contrary to this perception, life insurance premiums actually cost about the same as home and car insurance premiums. “Life insurance costs less than health insurance, while at the same time providing a higher payout at claim time. Life insurance can pay well into the millions depending on your policy,” he said.
Why the overestimation? According to Eade, consumers aren’t shopping around. “Buyers of life insurance products don’t shop around enough, probably because life insurance has typically been sold through face-to-face contact with an agent or advisor, making it more difficult to get a proper comparison,” he said.
So, now you know it’s out there. Should you get covered?
Your income is your greatest asset. It gives you the ability to live the lifestyle you want. While you may have some income protection available through your super, research has consistently shown that the level of cover you get from your super is likely to leave you exposed to financial hardship. Life insurance, on the other hand, pays out enough to allow you to continue to make your mortgage, rent and other repayments. You can keep your everyday lifestyle and know that your family is provided for and protected.
Eade believes that Australians need to realise that life insurance is affordable and an important part of any good financial plan. If you decide life insurance is for you, make sure you weigh up your options.
Using a comparison site such as Lifebroker can help you find a suitable premium for a reasonable price at no cost to you. Eade says the key is in finding an insurer who will take your personal situation into account. “Direct life insurance that is typically sold to consumers via TV, radio and through direct mail only asks for a minimal amount of health information. This forces insurers to classify the client as ‘high risk’ and in return, charge higher premiums,” he says.
“Shop around,” says Eade. Not only can you save up to 50% on the premium but you’ll have a qualified assessment to ensure you are covered for exactly what you need.
If you want more information, check out Lifewise for independent information on your insurance options.
It can be confusing to know whether to get a variable rate or fixed rate mortgage, and what features are important. That's why it's important to not only check the right rates, but make sure that you're getting the right features in your home loan. Get help choosing the right home loan