Chris Powell
Australian life insurer, Integrity Life (Integrity) has warned the high cost of living in the latest CPI data, which, recorded an overall year on year increase from December 2018 – December 2019, may have particularly harmful consequences for underinsured Australians.
The rising cost of living is disproportionately driven by the costs of the most important, life impacting areas such as health. While purchases of luxuries such as international travel, entertainment and clothes have actually become cheaper, health costs have increased by close to 200 per cent since 2000.
At the same time, the rising cost of living means Australians are more likely to forego emergency protection products such as life and health insurance.
Integrity Life MD Chris Powell said: “The latest CPI data shows Australians are facing higher health bills. But the overall rising cost of living means they are less likely to have the very products, such as life or health insurance, that can help pay those bills. The potential impact could really set people back, which is why we’re urging Australians to check whether they are adequately insured.”
Australia’s rate of underinsurance is already high. Integrity research[1] show 45 per cent of Australians believe they don’t have life insurance in place to meet the often enormous costs of a disaster such as a funeral or medical care, or to support the cost of living.
Youth and super option make life insurance more affordable
“Australians must understand how important life insurance can be in minimising their rising, potentially massive out-of-pocket expenses” said Chris.
According to Deloitte research[2], “life priorities for millennials and Gen Z include building their career, buying their own home, and starting a family. Life insurance provides security for these important elements of life, if the worst happens” said Chris.
Younger Australians and those around the peak of their career can take advantage of significantly lower premiums for life and total and permanent disability (TPD) insurance. For a 40-year-old man, finder.com.au research shows that, based on entry-level premiums, life insurance for $200,000 costs about $4.41 per week, but more than doubles to $10.65 at age 50 and rockets to $31.14 at 60. Women pay significantly less, with the average 40-year-old paying $2.81 per week. Even a 60-year-old woman pays just $16.30 per week, just over half that of the equivalent man.[3]
The majority of Australians also have some life and TPD insurance provided through their superannuation. “All Australians should remember they can pay for life insurance within your superannuation. Most of us are granted an automatic level of cover when we open a superannuation account, and this can be an effective way to pay for cover,” said Chris.
“However, changes to insurance inside super in 2019 mean that some people may have had their insurance removed. If you rely on insurance inside super, check your cover or contact your super fund to make sure you have an adequate level of cover to meet your needs. You should also think about speaking to a professional risk adviser”.
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[1] Integrity commissioned research by Pure Profile in July 2019 amongst a representative survey of 1000 Australian adults. The respondents were asked “If you suffered the loss of the primary earner in your household or if they suffered a permanent disability or illness rendering them unable to work, would you have the life insurance in place to meet costs of a funeral, ongoing living costs, medical treatment or other costs such as modifications to your home?
[2] Deloitte Global Millennial Survey 2019
[3] Finder, “What is the average cost of a life insurance policy in Australia” https://www.finder.com.au/weekly-cost-life-insurance.
