Under-insured Aussies turn to crowdfunding in hard times

From

Chris Powell

The failure of people to take out adequate life, income protection and TPD insurance is driving a boom in online crowdfunding websites according to new research from Integrity Life (Integrity).  

Integrity’s research found that Australians are stepping in to bail out those without adequate cover: 35% of respondents said they have donated following the death, illness or accident of someone they may or may not know. In the nationwide poll of 1,000 people, the results showed that more than one in five Australians has donated to a fundraising campaign to help others who are left unable to meet financial outgoings after the death of a loved one, and 24% have made a donation to a family to help with medical and living costs after a serious accident or illness. 

 Commenting on the research, Integrity Life MD Chris Powell said, “Crowdfunding has helped so many deserving people at difficult times. That said, we only hear about a very small number of campaigns that do well, and mostly because of the publicity surrounding truly heartbreaking scenarios. However, there are many more people who raise a very small amount.” 

Chris continued, “GoFundMe and crowd fundraising websites are not a contingency plan, nor are they a substitute for adequate insurance. They have an important role to play as a last resort for those who are genuinely in need.”

The poll found that fewer than four in ten Australians (38%) felt that they had enough life insurance to meet costs of a funeral and ongoing living costs if the primary earner passed away, or medical treatment or other costs if the primary earner suffered a permanent disability or illness rendering them unable to work.  

Chris continued, “Our research indicates that there are almost 11.5 million Australian adults who know they do not have enough life insurance in place to help them if the primary earner in their household lost the ability to support their family or worse still, their life. I expect the real figure would be even higher as people generally underestimate the financial impact of such a devastating event and the long-term effect on their life.”

In the last 10 years hundreds of fundraising platforms have sprung up around the world. Launched in 2008, GoFundMe is the largest of the social fundraising platforms and is considered to be the leader in memorial fundraising. An analysis of data by Integrity Life reveals that GoFundMe’s campaigns raise an average of $4,578 AUD* for those needing assistance after the death of a loved one. This includes campaigns asking for assistance with funeral expenses as well as meeting ongoing living costs. Medical emergency campaigns appear twice as often, but raise the same amount on average ($4,578). 

Chris concluded, “With underinsurance so endemic across life, TPD and income protection categories, GoFundMe and other crowd fundraising platforms have become both a first stop and a last resort. Unfortunately, most people don’t think they will ever need to call on life insurance but without it they’re forced to rely on the kindness and generosity of others and have their most private moments publicised.  Sadly, even then the success of the campaign depends on someone’s ability to tell their story and share with their network.

“Having adequate insurance will ensure people don’t end up in this precarious situation should the unthinkable happen. For those Australians unsure whether they have adequate level of cover, or who don’t currently have cover, it’s a good idea to speak with a professional risk adviser.”

Other key findings from the research

  • The age group most likely to support fundraising for families in need was 18 to 24-year olds, where half of this group had donated to a campaign.
  • Within this age group 35% had donated to a campaign following a death and 27% donated to assist a family cope with a serious accident or illness.
  • Just 19% of those aged over 65 years had donated to help a family after a death, illness or accident.
  • There was little variation across the age groups when asked whether they had adequate life insurance to meet the costs of their household’s primary earner losing their life or ability to support the family.
  • Those aged 35-44 were most likely to say they had adequate insurance whereas those over 65 years were least likely (30%).

 

Chris concluded, “With underinsurance so endemic across life, TPD and income protection categories, GoFundMe and other crowd fundraising platforms have become both a first stop and a last resort. Unfortunately, most people don’t think they will ever need to call on life insurance but without it they’re forced to rely on the kindness and generosity of others and have their most private moments publicised.  Sadly, even then the success of the campaign depends on someone’s ability to tell their story and share with their network.

“Having adequate insurance will ensure people don’t end up in this precarious situation should the unthinkable happen. For those Australians unsure whether they have adequate level of cover, or who don’t currently have cover, it’s a good idea to speak with a professional risk adviser.”

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