Everyone takes out insurance on their car, and most will take out cover for their home and contents (and you should!). Why? Because it’s a significant asset you can’t afford to lose. Yet when we talk about life insurances and income protection, people often don’t think they need, or want, life insurance. Lets look at the some of the common responses we hear and the counter reasons for why you may want to consider taking out (or reviewing) cover.
“I don’t need it”
No one wants to think of the worst. We get that. Like any other form of insurance, we hope you won’t ever need it! But ignoring the risk won’t do you any good if you do need to make a claim. If you have significant wealth and little debts, then indeed you may not need it, or you may only need a small amount of cover. This is why we review your cover on a regular basis to ensure you only pay for what you need. In fact, we may recommend you reduce your insurance over time as your financial situation changes. It’s important to ensure you have the cover you need to help protect you and your family.
“I’ve got insurance cover elsewhere”
While it’s fantastic if you’ve got insurance cover elsewhere, do you know:
• what type and amounts of cover you have
• what you are covered for, and
• what you may not be covered for?
You need to ensure that what you have is adequate to meet your needs, and you address any potential gaps.
It’s also important to consider other issues like: will your cover be underwritten at claim time or at time of application? Will the proceeds go to the correct person? These are all questions we can work through with you to get you the best outcome.
Did you know?
In 2016, Rice Warner actuaries found that:
• the typical amount of Life Cover held by Australians through their employer or superannuation fund, only provided between 40 – 60% of the amount required to meet basic needs
• the typical amount of Total and Permanent (TPD) and Income Protection (also called Salary Continuance) Cover only provided 13% to 17% of the amount required respectively.
(Source: Australia’s Relentless Underinsurance Gap 8 September 2016)
“I’ve got other priorities”
• ‘Shouldn’t I pay down my mortgage instead?’
• ‘Shouldn’t I make saving for my retirement
• ‘I can’t afford it’!
Having established that you have a need for insurance, it’s a matter of balance. You absolutely need to be saving for your retirement. You also need to pay for your children’s education. But if your income stops due to illness or injury, and you don’t have adequate cover, all these “other priorities” go out the window. Insurance can provide a sum of money to replace your lost income and help meet these and other goals and needs.
“My Insurance is no longer relevant to me”
This may be the case! But it’s important to review your insurance on a regular basis to confirm it still meets your needs. Your circumstances may have changed and your insurance needs may have changed with them. For example:
• Have you experienced a relationship breakdown or established a new relationship?
• Are your dependants still dependants?
• Are there new dependants?
• Has your debt reduced?
• Have your other assets increased in value?
These are all questions that we work through with our clients when undertaking a review of their insurance needs.
“Can’t I rely on social security?”
The Disability Support Pension (DSP) is currently less than 30% of the male average wage,
or approximately $22,800 per annum for a single person. According to the Australian Bureau of Statistics (ABS), only about 15% of current applicants are granted the DSP, with the vast majority of applications being rejected. So, the social security safety net may not be there if you need it.
(Source: ABC News. ‘Disability support pension: Successful claims plummeting after Government rule change’, June 2016.)
Secure and protect your future. Contact us to review your insurance needs, and get peace of mind knowing that you and your family’s lifestyle is protected, should the unexpected happen.