It's easy to take your health for granted, particularly if your young, fit and active. But everyone knows someone who's experienced a serious illness or injury. You know it happens and it can happen at any age.
- 1 in 2 Australians will get cancer
- 1 in 6 men and 1 in 4 women will suffer a disability that will prevent them from working for more than 6 months
- 1.7 million Australians under the age of 65 live with a physical disability
- 2 out 5 Australians will suffer a critical illness before they reach 65
2. I've got life insurance inside my super
If you're an employee, chances are you will have some group life insurance cover inside your superannuation fund. But do you actually know how much you have?
Group life cover is usually based on your level of salary. But it doesn't take into account your level of debt or the number of dependents you have which are crucial factors to consider when determining your insurance needs.
If you have a young family, Rice Walker Actuaries recommend insurance 10 to 13 times your annual pre-tax income. Your actual insurance needs may be higher or lower than this range, depending on your age, your debt levels and the number of dependents you have. Based on the Australian average wage that's between $662,000 and $860,000. Considering that the average insurance amount payable from superannuation is only about $70,000, it is clear that many Australians are dangerously under insured.
3. I'll be covered in some other way
Many people believe that if something happens that they will rely on financial assistance from Worker's Compensation, Government Assistance or Health Insurance. While some level of assistance is often available from these sources there are some things you need to know about the level of support you will receive.
- Worker's Compensation Insurance - gives you financial protection against work related injury and provides income replacement and payment of medical costs for eligible workers. It doesn't cover injuries that happen away from work, nor does it cover self employed, sole traders or independent contractors. Payments are also capped so the level of protection may not meet all your needs.
- Social Security Payments - will provide some financial assistance for people with an illness, injury or disability, however you do need to meet eligibility guidelines to get this assistance. Current cover for a couple aged of 21 years is $505.70 per fortnight each. That's a combined income of $26,296 per year, which is less than half of the average Australian income.
- Private Health Insurance - it can help with a number of specified medical expenses but it can't help you keep up with your everyday living expenses, like your mortgage. Benefits are often capped and may still leave you with a gap to pay out of your own pocket.
4. I'll use my savings or my Super
When you have a good level of savings or a large amount of superannuation it may seem like you've got a good safety net if you can't work for a while, but combine a lack of income with increased medical expenses and you might be surprised just how quickly your savings can evaporate particularly if you are still paying off debt. Relying on your savings and super can also jeopardise your future financial plans and goals.
Accessing your super isn't as easy as you might think, most super funds have pretty strict rules regarding accessing your super funds before the age of 65.
5. It's too expensive
When you have got so many things to spend your money on, insurance may seem like an unnecessary luxury, but think about some of the costs associated with injury and illness, like hospital and medical expenses, then think of the lost income that could result from months or even years out of the workforce.
You wouldn't dream of not insuring your home or your car, so why would you value your ability to earn an income (your most important asset) at risk.
$500,000 of life cover, $100,000 of TPD and Trauma Cover, and $3,000 per month of Income protection starts from as little as $3.00 a day for a 35 yr non smoking office worker.
Insurance doesn't have to be expensive, so contact us now to find out just how affordable your peace of mind is.