Facts about insurance

A recent research conducted by Lifewise and Natsem¹, quantifies, the number of families who will be impacted by underinsurance during their working lives. It looks at the financial impact on the typical middle- income family with young children and the expected cost to government over the next 10 years.

The results are startling:

• One in five families will be impacted by the death of a parent, a serious accident or illness that renders a parent unable to work;
• The typical Australian family will lose half or more of their income following a serious illness, injury or the loss of one of parent as a result of underinsurance;
• 95% of families do not have adequate levels of insurance; and
• Underinsurance is expected to cost the federal government $1.3 billion over the next 10 years.

You may not need financial help during your life. However, many people do and insurance is one way of providing that help.

• 48,500 Australians suffer a heart attack in any one year²
• 1 in 3 men and 1 in 4 women will suffer from cancer in their lifetime³
• 43,000 people died from cancer in 2010³
• 1 in 6 men and 1 in 4 women will suffer a disability during their working life that results in taking more than six months off work.⁴
• On average, Australian families now need 35.2% of their income to pay off their average home loan.⁵
• According to a Natsem study, it costs around $310 per week to raise two children.⁶
• There is a one in three chance you will need to be off work for three months due to illness or injury before you turn 65.⁷
• More than 42,000 people are expected to die from cancer in 2009.⁸
• Almost a third of Australians over 45 who retire early, do so due to ill health and injury.⁹
• Approximately 1,500 people die on Australian roads every year, the majority of whom are aged between 26 - 59 years.¹⁰

The right mix of insurance can protect you and your family from financial distress if unforeseen events occur. With the right insurance in place you are far less likely to need to draw down on your savings, or put your home, your children’s education and your long-term plans at risk.

Your financial adviser can help you arrange appropriate insurance, find you the right products at the right prices, and make sure your insurance arrangements are integrated into your overall financial plan.

1. Lifewise / Natsem Underinsurance Report, February 2010.
2. Heart Foundation, Australian Facts 2008: Heart, Strokes and Vascular diseases.
3. The Cancer Council Australia, www.cancer.org.au, April 2009.
4. National Health Survey: Injuries, Australia 2001 ABS Cat No. 43840.0 - Australian Bureau of Statistics, 2003 - Based on people aged between 35 and 65.
5. Real Estate Institute of Australia (REIA) media release, Low affordability challenges gen X,Y, 8 March 2007.
6. IFSA media release, Life and risk sales up - Aussies hear wealth protection message, 26 April 2007.
7. Institute of Actuaries of Australia, 2000: Interim Report of Disability Committee.
8. Investment and Financial Services Association (IFSA), Life Insurance : Framing the Issue, April 2009.
9. ABS, Retirement and Retirement Intentions Australia, July 2008 - June 2009, Catalogue no. 6238.0.
10. Australian Government, Road Deaths Australia 2008.

How much insurance do you need?

Time off work with illness or injury	Income protection insurance generally provides up to 75% of your gross monthly income, enough to give you time to recover without dramatically cutting into your family’s lifestyle.
Major medical bills after a serious illness or accident?	You can often package Living Insurance (trauma) and Total & Permanent Disablement (TPD) insurance with Term Life Insurance to make sure you cover life’s risks cost-effectively.
The death of the family’s main income provider?	An analysis by the Investment and Financial Services Association (IFSA) and Rice Walker Actuaries suggests a working couple in their mid-thirties with children, need life insurance cover of at least 10 times their taxable annual earnings.
A long term injury that prevents you from working in your current job?	Don’t forget the contribution a non-working partner makes. Given the cost of outsourcing domestic work and raising children, taking out insurance for a stay-at-home partner could be a wise decision.