Underinsurance reaches $1.8 trillion, report shows
The amount of life underinsurance in Australia is estimated at $1.8 trillion based on data from June 30 last year, according to a new report from Rice Warner.
The average cover accounts for just 60% of basic life needs for life policies, dropping to 13% for total and permanent disability (TPD). The figure for income protection needs is 17%.
The report, says a 35-year old man with earnings of $50,000 and two children would need $540,822 of cover for sudden death.
If a female partner of the same age earning $20,000 a year died, she would need to be insured for $437,602 to cover the family’s basic expenses.
The same family would require $920,006 of income protection for the man and $626,178 for the woman.
TPD cover required would be $497,356 for the man and $703,545 for the woman. The woman’s sum is higher due to replacement of unpaid domestic duties and lower social security benefits, the report says.
The report says the cost to the Federal Government of people lacking life insurance is estimated at $57 million a year.
The cost is $1.3 billion for TPD and $260 million for income protection.
The higher TPD figure is due to the low number of people holding policies. This means government pays more for disability benefits.
NB: Many people believe they have sufficient cover with their employer super, while never taking the time to actually understand what their entitlements are under these schemes.
Call Sarina Insurance on 49562243 to make a time to drop in your super statements so we can explain in simple terms, what your benefits are.
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