Copyright © 2014 Kerrie Peacock
According to the 2013 Financial Protection Index report published by TAL, three out of ten Australians are uninsured. It is important to have life insurance cover and it is not a question of not being able to afford it, but rather that you cannot afford to be without insurance, particularly for individuals with family responsibilities.
Life Insurance For Those With Limited Or No Responsibilities
Single people who have no dependents and few financial responsibilities live a care free life and therefore assume that there is no need to take out life insurance cover. Part of the 2013 TAL report corroborates this fact by indicating that the highest financial protection in the form of insurance cover is held by Australians who have a lot of responsibilities such as dependent children, a mortgage to pay and future plans for education and life stability.
There are valid reasons for singles with no responsibilities to buy life insurance anyway. One reason being there are always expenses to be taken care of in the event of a death, such as funeral expenses and outstanding accounts and taxes. Unless an individual has substantial savings set aside to cover such expenses, it could place a financial burden on family members which could be taken care of with the proceeds from a life insurance policy.
Another reason is that if life insurance is acquired at a young age when there is no health’s risk, premiums will be relatively low compared to taking out insurance later in life when age and health will affect the cost of life insurance.
Life Insurance For Those With Dependents And Responsibilities
If you are married and have dependent children, a life insurance policy will ensure that your loved ones are cared for in the event of your death and able to carry on their lives in the way they were accustomed to. In 2010 the Lifewise and National Center for Social and Economic Modeling reported that one in every five families in Australia is likely to experience the loss or disability of one or both parents through injury or unexpected illness. Dependent children will be financially destitute if that happens and their parents did not have life insurance.
A life insurance policy payout on the death of either or both parents will ensure that the mortgage is covered, that all medical costs are taken care of and that everyday life can go on without severe hardship.
The Cost Of Under Insurance
77% of Australians between the ages of 45 to 64 are under-insured, as reported by KPMG and The Financial Services Council. The report shows that under-insurance in Australia leads to an annual cost of $304 billion to Government and other taxpayers. If there is no insurance cover, the financial burden of families left behind after the death of the breadwinner will fall on the inadequate resources of social security benefits.
Early Insurance
Buying life insurance while you are young and healthy will save you money in the long run. As you get older, you are more likely to develop chronic illnesses as a study indicates that one in five Australian men and one in seven Australian women will develop a critical illness or dread disease before the age of 64. Age and health risks are taken into consideration when a new life insurance policy is taken out and affects the monthly premium, as well as the payout amount.
Kerrie Peacock keenly analyses various options for income protection cover provided by the Australian personal insurance industry. For more information and advice, log on to www.mecovered.com.au/why-should-you-buy-life-insurance.