Accidents, fire, floods, serious illness – chances are you’re already insured for these. But have you ever thought about how your family would cope if you didn’t have life insurance?
Many people avoid life insurance simply because they don’t want to think about what will happen to their loved ones in the event of their passing. But when it comes to life insurance, what you're actually buying is peace of mind.
Life insurance is about providing for your family after you're gone. Here are a few reasons why life insurance is important to you.
1. Super cover isn’t enough
Every working Australian has a level of life insurance cover within their super, but it’s usually not enough. Australia is still one of the most underinsured nations in the developed world.
Research shows that many Australian families would struggle financially if death or illness affected the main income earner. Despite this, a 2005 survey by IFSA found that parents were underinsured by $1.37 trillion – only 4 per cent of the population with dependent children had sufficient cover.
2. You need to plan for illness
Life insurance is not just about death, you also need to consider disability, critical illness and income protection insurance. If you lose the ability to work for six months, you may fail to meet mortgage payments and lose your home.
One in two Australian men and one in three Australian women will develop cancer by the age of 85. One in six Australians suffer cardiovascular disease. 27 Australians died of a heart attack every day in 2010. While survival rates and treatments improve all the time, serious illness can still take you out of the workforce for an extended period of time.
The majority of accidents and illnesses also occur outside the workplace, so aren’t covered by workers’ compensation.
3. Dependants need support
Having enough insurance means that all the bills and your mortgage will be taken care of. This lifts a huge burden from your bereaved loved ones.
But it’s not just the main breadwinner who should insure themselves. If a caregiver can no longer care for their children due to disability or death, their partner may not be earning enough to afford full-time child care.
4. Peace of mind is priceless
Above all, life insurance buys you peace of mind. Even if you’re a single person with no children, critical illness is a potential issue. For older people whose children are independent, you could be forced to sell your house or go through your savings if the worst occurred.
Government support is rarely enough to replace a working income. Centrelink pays a maximum fortnightly Disability Support Pension of $733.70 for singles or $553.10 each for couples. That’s well below the median monthly mortgage repayment of $1,800.
No one wants to face the worst realities of life, but if you have a family and dependants, you need to think about their future without you. With the average life insurance premium costing less than car insurance, it’s an investment you should seriously consider making.
For expert advice call Mortgage Choice, Windsor today on 3262 7555 to speak with our Financial Planner, Simon Devine.
*Source: Melissa Cortes, Moneyhound, 22 August, 2013.