Recent discussions with clients have revealed a negative perception about the use of insurance for personal risk management. This perception is probably a response to the relentless sales pitch coming from insurance companies. The insurance industry is vocal in telling us that Australia has the lowest level of personal insurance in the developed world, which raises the question as to what is an appropriate level of insurance? This consideration must balance the level of cover with the cost.
The appropriate level of insurance for Life Insurance; Income Protection; TPD (total and permanent disablement); and Trauma Insurance depends on your stage of life and lifestyle. A young couple with dependent children and debt would be advised to consider at least covering their debt and providing a reserve to meet the needs of the children. At the other end of the spectrum, an older couple who are nearing retirement and whose children are no longer dependent on them may be effectively self-insured through the value of their off farm investments and superannuation.
Most of us will experience an insurable event in our lifetimes. 40,500 people of working age were injured in transport accidents in 2005/06 and required more than five days in hospital. One third of all women and a quarter of all men will suffer cancer at some stage in their lives and over half of them will live for more than five years after diagnosis.
Our recommendation is to review your levels of personal insurance and compare these with the level of cover that matches your debt and personal situation. A cost benefit analysis can then be applied and worked through to deliver a strategy for managing the risks we all face.
We would be happy to assist you to review your own insurance requirements.