Personal Insurance The Insurance Crisis In Australia

Personal Insurance – The Insurance Crisis in Australia

by

Kerrie Peacock

It is a widely known fact that Australia is one of the most underinsured developed countries in the world. A 2011 survey by CommInsure Life Insurance found that Australians were underinsured by 3.1 trillion dollars. Only 56 percent had life insurance, with most having insufficient cover – 65 percent of them only had the default level of insurance in their super fund. The survey also found that 46 percent of Australians will go on holiday after a brush with death in comparison to 34 percent that will get insurance.

The risk of underinsurance

A typical underinsured family in Australia will see the family income drop by half in case of a tragic event, forcing them to struggle to make their mortgage repayments and meet other bills. As a result, those hit by the misfortune are left to depend on government payments, which are usually inadequate. According to the 2011 CommInsure survey, more than half of the Australian population would have to turn to Centrelink in the event that a family member became terminally ill or died. The average weekly support pension provided through Centrelink Disability is less than 350 dollars.

Reasons for underinsurance

Even so, insurance has been around for a very long time, but over the years, there have been numerous stories of Australians not being underinsured or not insured against disasters. The same reasons are often given for underinsurance, including the cost or inability to afford it, the assumed lack of need for insurance or the assumption that it\’s not important. Other reasons include not being aware of the need for it and confusion about the different types of insurance available.

Many young and healthy Australians believe they won\’t be affected by serious illness or injury. The leading reasons for taking out extra cover in Australia are when taking out a mortgage, on the encouragement of friends or family and when a child is born.

Insurance index

In February 2013, in an effort to test the popular perception that Australians are underinsured, TAL conducted a survey involving more than 1200 Australians. The vast majority of those involved admitted that they did not have adequate insurance. An index was developed to measure people\’s perceptions of their cover, which used a score of 0 to 100 based on the types of insurance an individual owned and whether he or she felt the coverage amount was sufficient.

The nation score for the index was a meager 24.2. Only 8 percent of the participants scored above 70. 30 percent scored 0 because they had no form of personal insurance. The results were surprising in light of the increasing take-up of life insurance via superannuation in the recent past. Although most Australians have some form of life insurance through their super, some are not even aware of it, while many more do not know whether their level of cover is adequate.

The need to put personal insurance at the forefront when making financial management decisions cannot be overemphasized. If you are unsure about how to go about obtaining insurance, speak to a financial advisor and learn the different insurance products available that would be relevant for you.

Copyright (c) 2014 Kerrie Peacock

Kerrie Peacock is a personal insurance researcher who is dedicated to providing accurate information on insurance matters in Australia. Visit

mecovered.com.au

for more information on personal insurance.

Article Source:

ArticleRich.com