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7 Common Myths about Life Insurance

When it comes to life insurance, many Australians are misinformed due to a number of myths that pass for “wisdom” in some circles. Unfortunately, many Australians buy into these myths and leave themselves and their families woefully underinsured or not insured at all. Here are seven myths about life insurance.

7 Common Myths about Life Insurance

“I am Too Young and Healthy to Get Life Insurance.”

Many young people overestimate themselves but no one can really predict when illnesses and accidents happen. By getting life insurance early, you can be sure that your loved ones are protected.

“The Government Provides All of the Protection I Need.”

The current maximum disability pension (for 2013-2014) is only $569.80 every fortnight for a single person and only $475.90 each for married couples. Can you sustain your current lifestyle on that payment?

“I’m Covered by Workers Compensation.”

Unfortunately, Workers Compensation only covers you if you are hurt at work. Most illnesses and accidents don’t happen at work, meaning that most Australians who rely on Workers Compensation are out of luck.

“I Can’t Afford Life Insurance.”

It is probably more accurate to say that you can’t afford not to have life insurance and it costs much less than many think. If you are 35 years of age, male and don’t smoke, you can probably purchase $500,000 in life insurance for around $30 per month. If you are female, 35 and don’t smoke, the same policy would probably cost around $25 per month, according to Lifewise.org.au.

“Insurance Companies Never Pay Life Insurance Claims.”

We really don’t know how this one got started, but would $3,650,000,000 change your mind? That is the yearly total of life insurance claims that are paid out in Australia. Ironically enough, this figure would be closer to $7 billion if every Australian had sufficient cover. These estimates come from the IFSA analysis based on APRA data and Risk Store data 2007.

“Many People are Priced Out of the Market.”

In reality, insurance companies try to make life insurance as affordable as possible because it is good for business. If it was too expensive for most people, who would be left to buy life insurance?

“Most People Already Have Enough Insurance.”

Unfortunately, according to IFF/AIST Research conducted in 2008, more than half of families with dependent children don’t have enough insurance to even pay a year of expenses if the breadwinner were to die.

Call Approved Financial Planners for more information: (08) 6462 0888.