Are You Under-Insured?



Nov 25

Why do Aussies under insure their most important asset… their lives?

If you are anything like me, until recently the topic of life insurance sounded either boring and irrelevant, too hard and expensive, or if I am being really honest, a little frightening. I was employed by a multinational until about 1 year ago, and somehow always had the feeling that I am covered for life.

Today, a little less young, but still very healthy while working very hard as a co-founder of Flare, I have learnt a lot about life insurance. I now realise how wrong I was on all accounts.

Let’s start with some facts:

  • The chance of your car being stolen and not recovered: 1 in 800
  • % of Australian car owners who insure their car : 83%
  • The likelihood you will be left without income for more than 3 months before the age of 65 due to disability or illness: 1 in 3!
  • % of Australians who have an adequate life insure – around 10%

This poses one big question… do we have our priorities straight?

Now a few findings from our own research, and some perceptions we hear again and again:

  • 9 in 10 people do not know what level of life insurance they have or if they have life insurance at all.
  • Often people are under-insured or don’t have life insurance because they think insurance is not affordable or accessible.

Why is this?

Why do we have these misconceptions and what’s behind the “under-insurance puzzle”? These findings come from speaking to many of our own customers and people close to me.

First of all, it’s not a priority – particularly for younger people. There are just so many way more interesting and immediately gratifying ways to spend your hard-earned dollars. If that sounds like you then that is precisely why you should be thinking about life insurance and tpd (total or permanent disability) as it is the easiest way to protect your cash flow should your health or employment status change. Also, the sooner you start in your life, the higher the likelihood that your premiums will be much lower.

Second – and this is the biggest misconception of all – it’s not accessible or affordable. When I have asked 20 random people if they knew that they could get any adequate life insurance paid with their superannuation contribution without affecting their take home pay, 80% Did not know that it was possible! This is truly striking. To explain in in very simple terms – every individual can decide what percentage of your employer superannuation contribution gets contributed towards your retirement savings, say for example 90% and say 10% (or whatever ration you decide you pick) goes towards your life insurance and you will get an adequate cover

Third, it is too hard to do – where do I go, how long will it take me and so on. All fair questions. The good news is that Flare does the hard work for you. We have done everything we can to set you up and amend your life insurance and tpd as your circumstances change and we make the choice of allocation so easy for you – without affecting your take home pay

Lastly, remember: it’s for you – but it is even more for those you care about the most!

Jan Pacas, Managing Director – Flare

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