December 21st, 2011 | Accounting News, Financial Planning News

Statistics indicate that the majority of the Australian public are under-insured. These statistics also indicate that in the event of the premature death of a parent, most Australian families would require at least ten years current annual income to ensure their family’s lifestyle could be maintained.

Without adequate insurance 60% of families with dependants will run out of money within twelve months of the main income earner passing away.

There is also a 33% chance that a parent will be temporarily disabled for more than three months before they turn 65.

Given the above, it would be reasonable to assume parents would obtain sufficient cover to protect their families however underinsurance remains a serious issue in Australia.

This can be attributed to the attitudes and behaviours of Australian families in relation to insurance. Whilst the general public are in agreement with the benefits associated with personal insurances they are still concerned with the cost and the procedures such as a blood test to acquire the insurance.

Conversely, we do not hesitate to take out car, home and contents insurance. However this rationale is flawed. If we have purchased our car or home on finance such as a loan or a mortgage, then the asset will more than likely need to be sold in the event that we are off work, uninsured for any length of time. Likewise, if the main breadwinner of the family passed away and there was no life insurance then the possibility of that family retaining the home will be extremely difficult or in the case of a recently purchased home with a relatively large mortgage almost impossible. On the other hand if we were working and our income was insured and our car wasn’t insured but was damaged and required repairs, whist the predicament would be extremely unfortunate we would more than likely cope with this predicament

The different types of cover and the benefits they provide, are summarised below:

Life Cover –  Provides a lump sum payment in the event of your death. This money can be used to :

  • Clear your debts
  • Enable your family to meet their ongoing living expenses and maintain their lifestyle
  • Provide your beneficiaries with an inheritance

Total and Permanent Disability Cover – Provides a lump sum payment if you suffer a total and permanent disability and are unable to work again.This money can be used to :

  • Clear your debts
  • Cover medical and rehabilitation expenses

Critical Illness or Trauma Cover – Provides a lump sum if you suffer or contract a critical condition specified in the policy (eg cancer, a heart attack or a stroke). This money could be used to:

  • Cover medical and other expenses such as rehabilitation, childcare and housekeeping
  • Clear some or all of your debts

Income Protection Insurance Cover – This provides a monthly payment of up to 75% of your income if you are temporarily unable to work due to illness or injury. This money can be used to meet your ongoing living expenses and financial commitments while you recover.

With regard to personal insurances, it is essential to get the strategy and product mix right.  So if you think personal insurance is appropriate for your particular circumstances you should speak to us.  Here at The Quinn Group our experienced team of Financial Planners, Accountants and Lawyers can provide you with the total solution and assist you with all your financial needs. For advice about the insurance product mix that is right for you, contact  Peter Quinn by submitting an online enquiry or calling us on +61 2 9580 9166 to book an obligation free appointment.