David French | 29/11/2010 12:21:05 PM

This article was first published in The Morning Bulletin under the heading Will she be right mate? dated 30 October 2010.

Our “she’ll be alright” attitude as Australians may make us one of the most relaxed nations in the world, but when it comes to life insurance it leaves us and our families at serious financial risk should the worst happen.

Research shows that while one in five families will be impacted by the death of a parent, a serious accident or illness that renders a parent unable to work, 95% of us have inadequate life insurance. Australians tend to lack an understanding about the personal risks they face everyday. In fact, Australians are just as worried about burglary as they are about an illness that prevents them from working but are three times more likely to have insurance for their home and contents than their income. How can that be?

Underinsurance can have a huge impact on the lifestyle your family chooses to follow. The family income can often halve if families lose the main breadwinner and an unexpected event can affect your family’s way of living including making mortgage repayments, the cost of running a car, holidays and other expenses. While your superannuation fund may provide a basic level of cover – quite often it is not enough.

Employees in particular should be thinking about income protection which can provide a regular source of income if, through illness or injury, you are unable to work for a short or long period of time.

Obtaining adequate life insurance doesn’t have to be complex or expensive and it is an easy way to give your family peace-of-mind. Start by checking out what existing levels of cover you have through your superannuation fund. Alternatively, you can see a financial planner or approach an insurer directly yourself.

If you are unsure if you are adequately covered visit Lifewise (www.lifewise.org.au) to learn how much is enough and more about the benefits of protecting your family against financial risks.

Other measures to help protect against unforeseen loss of income due to illness include getting ahead on your home loan, and building a savings pool. These measures can be used to fund your income requirements for a period before income protection insurance kicks in, often resulting in substantial costs savings.

The Investment Collective (AFSL 471728) is a non-aligned financial planning and investment firm specialising in providing tailored financial and investment advice for individuals and small business. Capricorn Investment Partners Limited's services include financial planning, share trading, portfolio management, insurance broking and self managed super fund administration. Additional information on services provided by The Investment Collective Limited can be found by following this link. Readers are reminded that this document has been prepared for general information purposes only, and any advice contained herein has been prepared without taking into account your financial objectives, situation or needs. Readers are advised to see their financial advisor prior to acting on any general advice.

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Related articles and other links:

• Lifewise