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Empower Wealth Blog post by Empower Wealth

The Myths and Facts of Insurance  

As you would appreciate, no one would buy a brand-new car and leave the showroom without insuring it. 

So why is it then that thousands of Australians leave their house every day to go to work with minimal to no personal insurance coverage at all?  

Just like insuring a new car because they know they need it, why is it that many Australians feel they either have enough insurance or simply that they don’t need it?

Or is it because they think they can’t afford it?    

There are several reasons why people feel this way. To overcome this feeling, people should focus on the facts to dispel the myths which can help them feel more comfortable with taking action. Below are some of the most common myths believed by clients:

Myth 1: I’m pretty sure I have enough insurance through my super 

Fact: The reality is people do not know exactly what they have through their super.

They see numbers on the statement that might show a death benefit but have no concept of what it means and how it works. Remember, most people are given an automatic level of cover via their super fund that is set for all members in mind, so it is unlikely to be the exact level of cover that they may actually need to protect their family.  

  

Myth 2: But I don’t need insurance; She’ll be right, the Government will look after me if I get sick or injured 

Fact: Wrong! This may not be the case. At best Centrelink will pay a maximum disability pension for ages 21 years and older of $900.80 per fortnight for singles and $679.00 (each) for couples. Not sure if this would cover the current lifestyle? How could you pay the mortgage on this?  

  

Myth 3: My work covers me as I have workers compensation  

Fact: It depends. Workers compensation only covers sickness, accidents or injuries that occur during working hours as a direct result of the employment. Most accidents and illnesses occur outside of the workplace which means there is no cover in place. Therefore, it is unwise to think that one can  protect their lifestyle and their family by relying on workers compensation alone. 

  

Myth 4: How much does it cost? Life insurance is not affordable 

Fact: Australians today have many options to pay for their insurance which can make it very affordable.

Most working Australians will already have some form of insurance in their superannuation, so it is about finding out how much they have and determining how much is right for them.

This may mean topping up their existing insurance via their super or looking at all the options available which may be more cost-effective and have better features for far greater value.

As we know, some options that may be important to some may not even be available via their super. Others could be caught short if they are not working and they hold income protection via super and have to claim.  

Once again, many people are simply not aware of what they have and how much it is costing them.   

  

Myth 5: But I’ve heard Life insurance companies do not pay claims 

Fact: What garbage! Insurers do pay claims. In fact, life insurance companies pay out over $12 Billion claims to 101,821 Australians. Do you want to be the one to tell your family that you don’t have any insurance cover when disaster strikes?

 As highlighted before via many research papers on the underinsurance gap in Australia, the median level of life cover held by many Australians meet only 61% of the basic needs of families with dependent children. Furthermore, the median life cover amount is only 37% of the income replacement level. This is the amount required to replace the expected net income of the insured while maintaining current living standards until the insured reaches age 65.

Do you think this would cause unnecessary hardship for numerous Australians?  

This article was first extracted from Clearview Life on 29th March 2022. Learn more about Clearview Life here. It does not take into account your objectives, financial situation or needs. Please seek personal advice before making a decision about a financial product. No liability or responsibility is accepted by Empower Wealth or any of its subsidiaries, or by any agents, officers or employees of Empower Wealth and its subsidiaries, for any loss arising from reliance on this communication. Case studies are for illustration purposes only. Any tax information provided is a guide only. It is not a substitute for specialised tax advice. 

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