The Importance of Life Insurance at any Age
Today we have a couple of posts for our Australian Readers. In this – the first – our resident Australian contributor Raj Padarath discusses the importance of life insurance at any age. Over to you Raj!
The topic of life insurance is one that usually causes those who listen to it to hurriedly change the subject or to change the channel. However, there is no reason why this should be the case, and this article goes through why life insurance is important at any stage of life for Australians, especially those over 50, and how far from being sad, life insurance can ensure you leave your family with memories of laughter and happiness.
Surveys conducted by organisations show that the practice of underinsurance is a real problem in Australia. Far from being a convenient insurance company sales pitch (as many of us are inclined to think) the facts and figures show proof that life insurance is not taken up with anywhere near the same enthusiasm as car or home insurance, which is surprising given the importance of a life versus that of the old family car in the garage!
Researchers DEXX&R found that only 22% of Australians hold any level of life insurance, and of that number, two-thirds had less than half the cover that would be required. Put simply, that means that 4 out of every 5 people that are reading this don’t have the right level of life insurance. A later Lifewise and NATSEM joint report painted an even starker picture, with an estimate that 95% of Australians would leave a shortfall in their family finances as a result of inadequate life insurance cover.
A quick survey of the most common reasons for avoiding life cover shows there is a full range of reasons why it is avoided. Perhaps the most common is the perception that life insurance is far too costly to maintain alongside all the other expenses of a family. However, the government and the insurance industry have worked hard to ensure that the reality is far from this, with tax deductible premiums as well as an incredibly competitive landscape among the major providers for the business of consumers. Maybe you feel that you are too old to be thinking about life insurance and that it would just be too expensive. While it is true that the cost of cover does increase as you get older, it may not be as expensive as you think. There are any number of institutions you could choose from to begin your research, but if you prefer to deal with companies that have a strong history and a proven track record, then APIA over 50 life insurance policies can be a great place to start.
Other reasons for the shortfall in life insurance cover are the belief that insurance is only for the unwell, the government will provide for families in difficult times or that superannuation will take up the slack. Unfortunately, all of these can prove to be incorrect, and all stem from a basic lack of willingness to get on the phone or Internet and find out exactly what you are covered for because of the time or hassle it would take to do so.
The effects are certainly not worth the miniscule amount of time you would spend researching and getting the right cover. For example, the most common course of action for a family dealing with a loss of a primary income earners salary is to sell family assets to keep up with expenses, which in the majority of cases is the family home.
Life insurance cover is a naturally avoided topic, but leaving arrangements in place that ensure that your family is able to continue their lives in the way that you envisioned for them is far more important, no matter what your stage of life. And who knows, you might even decide to have some fun with it. There are great stories out there about conditions that people leave attached to their payouts. One true cricket fan insisted his family could only receive his payout if his sons all escorted his ashes in an urn to the Sydney test match, while another made a provision requiring all of his immediate family to be driven to his sending off in Ferrari’s because of his lifelong passion for the Italian icon! Now who said life insurance had to be boring or sad?
Would you attach any funny conditions to your life insurance payout?