No matter how much the world around us changes (seriously, 2020 has been one hell of a ride), there are a few things that never do – the misconceptions around life insurance!
I’ve worked as an adviser for 8 years, and in finance for even longer, and I still hear the same excuses for not getting covered and the same ‘fake news’ about why people think it’s not for them.
It’s time to fact check some of those ideas!
I’m single – I don’t need life insurance.
This statement is usually made when someone thinks that life insurance is just about paying some money to your partner if you pass away. But there are actually a number of different covers that fall under the wider term ‘life insurance’ and some are extremely valuable for singles, like income protection for example.
Think of it this way, do you earn an income? What would happen to you if you couldn’t work for a period of time? If your income stopped, how would you keep paying the rent, electricity, phone bills? How would you pay for your medical treatment?
This year, thousands of workers around Australia have had to adjust to living on a decreased income. Thankfully, the Government has helped by paying benefits to people impacted by COVID-19, but this really is an unprecedented time. Ordinarily, if you lost your income due to illness or injury, you would have a lot fewer options to manage your expenses.
While it’s important to note that income protection is designed to replace your income if you can’t work due to illness or injury, I do think that the current situation has made a lot of people think about just how stressful it can be to manage on a reduced income. Having income protection, or one of the other ‘living’ covers, can make an amazing difference and help you heal faster.
I’ve got enough cover in my super.
With the Government allowing people to access their super early due to COVID, a lot of people have probably thought more about their super than usual this year. But, ask yourself honestly if you know exactly how much insurance cover you have inside super. Is it just life insurance, or do you have TPD and/or salary continuance cover? What are the waiting periods? How much do you pay in premiums each year?
In some cases, you may actually have sufficient insurance cover inside your super to meet your needs, but it’s important that you know for sure. Book yourself in for a complimentary insurance review with a financial adviser and find out exactly what you have and whether it’s sufficient to manage your debt, income loss and medical expenses.
Oh, and as I covered last month, if you have withdrawn money from your super, you may no longer have enough in your account to pay for your insurance cover. Again, book in for a review and get the certainty you need.
Life insurers don’t pay claims.
To quote a certain politician, this one is definitely ‘fake news’. In 2019, over $12 billion in claims was paid out by Australia’s life insurers, to more than 100,000 claimants. That’s nearly $33 million paid out each day to Aussie families.
Want more proof? Last year, 97% of life insurance claims were paid, and 95% of income protection claims were paid. And claims submitted by an adviser are much more likely to be paid than those where the policy was purchased direct from the insurer.
The key is getting the right policy for your needs, reviewing it regularly to ensure your protection strategy is still on track, and having someone in your corner when it’s time to make a claim – this is what financial advisers are here to do.
So, before you write-off 2020 as a disaster of a year, think about some of the lessons it has taught us about how unpredictable our world can be, the importance of being on top of our finances and the value of seeking expert advice. And remember, don’t believe everything you hear!