Myths, life insurance, insurance, policy, policies, FSC, Financial Services Council, Life Code of Practice, Life Insurance Code of Practice

Policy

Debunking the myths

You wouldn’t choose to insure only half the value of your car or home would you? So, why is it that most Australians only have half the life insurance cover they need?

There are a number of reasons – people think they already have enough, they believe they don’t need insurance or they think that it’s too expensive.

It’s important for you and your family that you base your future on facts, not myths.

Myth 1. I have enough insurance inside my super

FACT

Unlikely. Remember the automatic level of cover provided via your super fund is set with all members in mind, so it is unlikely to be exactly the level of cover you and your family need.
 

Myth 2. I don't need insurance, the Government will look after me if I get sick or injured.

FACT

This may not be the case. Centrelink will pay a maximum disability pension for ages 21 years and older of $797.90 per fortnight for singles and $601.50 (each) for couples.

Would this cover your current lifestyle?

For more information about the Disability Support Pension visit www.centrelink.gov.au
 

Myth 3. Workers compensation will cover me.

FACT

Workers compensation only covers accidents or injuries that occur during working hours or for an illness that’s the direct result of your employment. The majority of accidents and illnesses occur outside of the workplace. So if you want to protect your lifestyle and your family it’s unwise to rely on workers’ compensation alone.

 

Myth 4. Life insurance is not affordable.

FACT

For most Australians, insurance is very affordable.

Most working Australians will have some form of insurance already in their superannuation, so it is really about finding out how much you have, and determining how much is right for you. This may mean you only need to slightly top it up which could cost as low as the price of a cup of coffee a day.

 

Myth 5. Life insurance companies do not pay claims.

FACT

In fact, life insurance companies pay out $7.8 billion a year.1

 

Myth 6. Many people have to pay higher premiums or cannot get life insurance at all

FACT

Insurers are in the business of giving people access to insurance at an affordable price. If they failed to do this, they wouldn’t have a business.

People who have a higher risk of developing a chronic illness or who work in high-risk occupations are usually required to pay an extra premium to cover this risk – but this only applies to a few people.

 

Myth 7. Most people have enough insurance.

FACT

Unfortunately, this is not the case. In fact, latest research shows that the median level of life cover meets only 61%2 of basic needs of families with dependent children.

Furthermore, median life cover is only 37%3 of the income replacement level, the level required to replace the expected net income of the insured and maintain current living standards until the insured would have reached age 65.

This causes unnecessary hardship for numerous Australians.

1 APRA 2016 - Quarterly Life Insurance Statistics
2 Rice Warner’s Underinsurance in Australia 2015 report
3 Rice Warner’s Underinsurance in Australia 2015 report

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