Survey finds Australians are seriously underinsured when it comes to life insurance and income protection

According to CommInsure’s Life Risk Survey 2012**, Australians are seriously underinsured.

In fact, many Australians said they would be in financial peril if they were out of work for more than three months due to a serious accident or illness.

Faced with the inability to earn an income for over three months, 39.4 percent of respondents surveyed said they would have to mortgage or re-mortgage their home, 32.4 per cent would have to downsize their home, and 28.3 per cent would be forced to move in with family or friends.

Further, the survey highlights many people seem to be taking a set-and-forget approach when it comes to insurance – typically not topping their cover up when their situation changes (e.g. when they have children, or increase their debts, or increase their income).

This creates a false sense of security that the insurance is taken care of, but a worst case scenario can leave many families ill prepared and facing significant lifestyle adjustments if the unexpected happens.

Here are some of the key findings:

  • One third (33.3 per cent) say that their life insurance cover would not even pay off their mortgage, and a further 18.2 per cent were unsure if it would.
  • Almost half took out life insurance cover through their super fund with no advice, and only one in five has ever topped up this insurance.
  • Of those holding Total & Permanent Disability (TPD) insurance, only one in five (19.6 per cent) have ever topped up this cover.
  • Only one in ten respondents (10.7 per cent) has trauma insurance.
  • Most respondents (54.3 per cent) do not hold any income protection cover and a further 11.3 per cent are unsure either way. Of those with cover (34.4 per cent), less than a fifth have ever topped this up.

Common tasks putting Australians most at risk

Everyday accidents are putting Australians in hospital, and out of work. More than half surveyed (55.5 per cent) have been or know someone to have been hospitalised due to a car accident; 47.7 per cent due to sports accidents; and 41.5 per cent following an accident at work.

Thirty per cent have been or know someone to have been hospitalised due to do-it-yourself jobs around the home and 32.3 per cent for other home activities. Serious pushbike accidents are also prevalent (30.4 per cent) and 21.3 per cent of respondents have or know someone who has suffered a physical assault in public or at home.

Most people surveyed also severely underestimate the cost burden of treating and managing traumatic injuries. Nearly 50 per cent put the cost of treating and managing spinal injury at below $350,000 over a 5-year period. However, spinal injury is estimated to cost over $650,000 during this time frame.

Affordable cover is just a call or an email away

If you need life insurance, income protection, trauma insurance or TPD insurance, please call or email us. We think you will be pleasantly surprised at how affordable life insurance is.

**CommInsure commissioned CoreData to conduct this survey in August 2012. 1,078 Australians – aged 18 and over – were polled.