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Insurance; the myth and fact revealed

September 2010

Do you find it hard to navigate your way through the fact and fiction when it comes to insurance? Death, Total and Permanent Disablement (TPD) and Salary Continuance Insurance (SCI—also known as Income Protection) cover can often be complex topics, riddled with half truths and rumour. The following points may help you separate insurance fact from insurance fiction.

MYTH: I’m young and healthy, I don’t need Death, TPD or SCI cover

No matter your age or circumstances, now is the time to consider Death, TPD and SCI cover. If a breadwinner in your family fell ill or died, would your family be able to cover mortgage, loan and other bill repayments?

And insurance isn't just for families. It's important for singles too, to help protect your lifestyle, your independence and cover your debts—in the event that something happens and you need to.

Thinking about death or illness insurance can be uncomfortable and daunting. But making yourself aware of the types of insurance available to you in these circumstances is important, and may even be critical to your overall financial plan.

FACT: Most Australians who do have insurance are underinsured

Plum members have on average $237,000 of Death insurance, and although that may sound like a lot of money, would it be enough to cover mortgage, loan and other bill repayments?

A good way to get some guidance on how much insurance you’ll need is by adding up all your current financial commitments. It’s also important to seek financial advice from a licensed or authorised financial adviser to ensure that your Death, TPD or SCI insurance gives you enough coverage and that it fits in with your overall financial plan. Using our Insurance Gap calculator may help you identify whether your current level of insurance is adequate. To access the calculator, simply log onto the member website.

MYTH: I don't need any more insurance cover, I've got some through my super

The default levels are set with all members in mind and do not take your personal circumstances into consideration. That’s why you should assess whether the default level you currently have would be enough to cover all your financial commitments.

MYTH: Death Insurance companies never payout

FACT: Death, TPD and SCI cover doesn’t have to cost the earth

Find out more about insurance offered through Plum.

¹ Lifewise/NATSEM underinsurance report
² www.lifewise.org.au