The optimism of under-insured Australians

Written by Michael McAlary

Australians by their nature are happy go lucky people. We love the outdoors and the simple things of life. Visitors to Australia frequently comment on how laid back and friendly we are. These are wonderful attributes. However, from our own risk management perspective it is no so good because many of us neglect our financial security. On the one hand we want a good lifestyle, but for some reason we are reluctant to invest in protecting it. The bottom line is that we are under-insured.

Life expectancy & insurance

We are living longer and as a percentage of our life we are working less. A person born 1960 had a life expectancy of 71 years, worked for 44 years and was retired for 8 years. Today that person is expected to live to 82, work for 35 years and be retired for 22 years.

Trauma insurance & income protection insurance

If we are living longer despite the substantial improvements in medicines, we run the risk of major events impacting on our life. The events include heart attack, cancer, stroke and other debilitating diseases that prematurely end our income generating years. Trauma Insurance and Income Protection Insurance (tax deductible) provide piece of mind and protect you from losing your house and other assets if there is no or limited income to pay the mortgage. It’s important to remember that while Medicare will pay the medical costs, it does not cover personal or business costs.

Life and total permanent disability

Everyone should have Life and Total Permanent Disability Insurance (TPD) through their superannuation fund. If not, find out why. We should all check whether the level of Life/TPD is sufficient to meet our life style needs. Also, remembering that most insurance companies have age limits on Life/TPD insurance, so when we reach that age unless there are sufficient income and/or assets to cover any event, those assets may be needed to fund a major medical event.

House and content insurance

The level of under-insurance in this area was very much in the spot light in the aftermath of the NSW/Queensland and Victorian floods and fires of 2011/2012. Many flood victims were uninsured which is amazing given that usually a person’s major asset is their home. In a single swoop many Australian’s lost everything and were not only starting from scratch but in many cases were in debt.

Having insurance that is structured around your needs is both sensible and provides peace of mind.

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