Underinsurance reaches $1.8 trillion
According to a new report from Rice Warner, the amount of life underinsurance in Australia is estimated at $1.8 trillion.
The average cover accounts for just 60% of basic life needs for life policies, dropping to 13% for total and permanent disability (TPD). The figure for income protection needs is 17%.
The report says the cost to the Federal Government of people lacking life insurance is estimated at $57 million a year.
The cost is $1.3 billion for TPD and $260 million for income protection.
The higher TPD figure is due to the low number of people holding policies. This means government pays more for disability benefits.
There can be severe consequences for the underinsured. A significant proportion of Australians would face financial hardship if they were to have an accident, become sick or die. Individuals and the families of loved ones face financial burden at a time of intense personal pressure. The consequences of this can be generational.
The only way to combat underinsurance is to always assume that there will come a time when you must make a claim and insure appropriately for the full amount required to cover any losses. If you don’t, your business contents, building and life insurance policies could be impacted.
This information is of a general nature only and neither represents nor is intended to be personal advice on any particular matter. Insurance Advisernet Financial Services Pty Ltd strongly suggests that no person should act specifically on the basis of the information in this document, but should obtain appropriate professional advice based on their own personal circumstances. Insurance Advisernet Financial Services Pty Ltd and its advisers are Authorised Representatives of Fortnum Private Wealth Pty Ltd ABN 54 139 889 535 AFSL 357306. Any personal advice provided by Paul in respect of life insurance products is done so as an Authorised Representative of Fortnum Private Wealth Pty Ltd.
Paul Lewis Authorised Representative No. 262 180 is a director of Lewis Insurance Services (LIS). Paul and LIS are authorised to provide general insurance services only as authorised representatives of Insurance Advisernet Australia Pty Ltd ABN 15 003 886 687 AFSL 240 549. Paul is also authorised to provide financial planning services only as an authorised representative of Fortnum Private Wealth Pty Ltd ABN 54 139 889 535 AFSL 357 306 trading as Fortnum Financial Advisers and nominee of Insurance Advisernet Financial Services Pty Ltd ABN 19 132 170 337 AFSL 357 306.