Are You Underinsured?
Australians are unknowingly underinsured, leaving them vulnerable to financial hardships in the event of accidents or injuries. Personal Insurance offers crucial protection for incidents like illness, disability, and death.
Many Australians are underinsured and don’t know it until they experience an accident or injury and are left to foot some or all of the bill. Not having adequate insurance can erode your savings, deplete your assets or result in significant financial hardship.
What is Personal Insurance?
Personal Insurance is a type of cover that provides financial security to you and your family for incidents such as injury, illness, loss of ability to earn, total and permanent disability, and even death.
Some of the most common types of personal insurance are:
- Death cover in the event of your death or if you suffer from a terminal illness.
- Total and permanent disability (TPD) covers if you suffer a total and permanent disability due to an illness or injury.
- Income protection if you can’t work due to illness or injury.
What Is Underinsurance?
Underinsurance occurs when the sum insured on your insurance policy — the maximum your insurance will pay out when you make a claim — isn’t enough to cover the full cost of what’s needed.
You can be underinsured if your policy has gaps or exclusions that leave you without coverage, or if your claim exceeds the maximum amount that can be paid out by the insurance policy.
Even if you selected a good insurance policy originally, you can be underinsured if your circumstances have changed but your policy hasn’t. Changes in circumstances can include:
- Your family has grown
- Your income rose
- You have developed significant debt
- Your financial goals have changed
What Percent of Australian People are Underinsured?
An estimated 94% of working Australians have some level of life cover, but their coverage level is far lower than the recommended amount of some financial advisers. Financial consultants Rice Warner concluded in their report on Underinsurance in Australia that the average 30-year-old couple with children needs:
- 8 times the family’s income for life insurance;
- 4 times the family’s income for Total and Permanent Disability (TPD) insurance, and
- 85% of family income for Income Protection (IP) insurance.
The median coverage Australians actually have is 2 times the family’s income for life insurance, 1.5 times for TPD, and 36% for IP.
Have you made a claim against your insurance and are unable to meet your expenses or debts?
If you received advice from a financial advisor when establishing your Life, TPD and IP insurance they should take into account information such as your age, income, number of children and their ages, assets including superannuation and investments, and debts such as mortgages, car loans, and credit cards, amongst other factors.
If, after receiving a payment under a Life, TPD or IP insurance policy you find that the amount of your payment does not enable you to meet your monthly expenses, meet your family commitments or pay out your existing debts, you may be able to bring a claim against your financial advisor for incorrect or negligent advice.
FD Legal – We’re Here to Help
If you have made a claim against your Life, TPD or Income Protection insurance and think you might have been underinsured or have received inadequate or incorrect insurance after speaking with a financial adviser, contact us.
Financial advisers must be considered a fit and proper person and act with honesty and integrity in their dealings with clients. They are supposed to offer unbiased, personalised, and informed recommendations on a per-client basis. Those who do not may be banned from providing financial services by ASIC. Recent bans include adviser James Furnell and financial advice firm United Wealth Group.
We are committed to ensuring our clients receive the best possible advice and guidance on their situation, especially in financial matters. You can contact us online, call us at 1300 433 533 or email us at enquiry@fdlegal.com.au.
