The Australian Life Insurance Movement was inspired by a similar movement over at Good Financial Cents in the United States as part of Life Insurance Awareness Month. Life Insurance Awareness Month occurs every year in September and is organised by LifeHappens a Not for Profit organisation dedicated to helping consumers make smart insurance decisions.
In honor of the month, here are some facts about life insurance to help you better understand it’s history and coverage.
Life insurance coverage started in the U.S. in the late 18th century.
Believe it or not, life insurance is a centuries-old financial product founded in part by one of America’s Founding Fathers, Benjamin Franklin. After being instrumental in creating the first fire insurance coverage for homeowners, Franklin helped launch the first life insurance company in 1759, the Presbyterian Ministers' Fund, located in Philadelphia, Pa. At first, many religious authorities criticized the policies, believing one shouldn’t put a financial value on a person’s life. But their perspectives evolved once it proved to offer helpful financial protections for widows and orphans, creating a legacy in America for protecting people’s lives through life insurance.
Two different options exist for coverage.
When buying life insurance, people have 2 different options: term and whole life/permanent. Term life insurance is good for basic financial coverage, and you receive the payout only when the policyholder dies during the policy’s term. Typically, no other benefits come with term life. The next option is whole life or permanent insurance, which pays out no matter when someone dies and no matter how long you live. Permanent can pay cash value should the policyholder wish to cancel it at any point. Both policy types come with additional variations to the policies.
And you can even purchase both term and permanent insurance at the same time to maximize your coverage, should it support your unique financial needs.
The Australian movement was created to raise awareness about the severe problem of underinsurance and general lack of education about personal insurance in Australia. In order to help spread the word, a community of Australian digital parents are teaming up with Life Insurance Finder to write about Life Insurance Awareness (and the lack thereof) in Australia throughout the month of September 2012.
Australians are severely underinsured
Did you know that:
One in two industry fund members are underinsured by $100,000 or more.
More than 50% of respondents are under-insured for death cover by $100,000.
For Total and Permanent Disability cover, 74% are underinsured by $100,000 or more.
For Income Protection cover, 45% are underinsured by $1000 or more a month.
The only exceptions were those who are under 32 with no dependants; this group was found to be over-insured in many cases.
Source: 2008 joint survey conducted by the Australian Institute of Superannuation Trustees (AIST) and Industry Funds Forum
Why do Australian’s need the Life Awareness Movement?
Nearly 50% of Australian's have difficulty in understanding insurance terms and gathering unbiased information and one third of super fund members are unaware that their fund offers insurance cover. This means to say that many Australian's really have no idea just how much insurance cover they actually need.
Actual cover vs cover required (based on IFF/AIST formulae)
Average death cover: $189,000 Vs Average cover required: $431,000
Average level of TPD: $162,000 Vs Average cover required: $437,000
Average level of IP $2,700 a month Vs average level required: $3750
Why support the Life Aware Australia Movement?
To help others avoid potential financial burdens at times of immense stress
To help others gain awareness of the underinsurance problems in Australia
To ensure your family and your loved ones are protected
Determine if you need life insurance or Income protection insurance at all.
Work out exactly how much cover you really need using a life insurance calculator that you may find online.
Compare life insurance plans and determine which plan is best for your needs.
Feel free to ask questions of our insurance experts.
A variety of factors will affect what type and amount of coverage is best for you and your family. If you don’t yet have life insurance coverage or would like to explore if you have adequate coverage, we’re happy to help.
Do you need more advice when it comes to getting a life insurance? Call 1300 764 901 Now to arrange an appointment.
[Source: LifeAWARE Australia: Australian Life Insurance Awareness Month by Richard Laycock; Life Insurance Awareness Month: Facts to Know.]