When it comes to a life plan Australia may not legally mandate it, but it is certainly an important part of financial security. Unfortunately, life insurance myths abound, and this prevents many people from taking the action that they need in order to protect their families from the possibility of a sudden loss of income as a result of death, illness, or injury in the family.
One common misconception is the idea that the Australian government will take care of an individual's family after they die. About seven out of every ten Australians falsely believe that the government is obligated to offer financial support to their family if they die or are unable to work. In reality, the government is under no such obligation, and families will be forced to fend for themselves.
Many people also misunderstand the benefit period of life insurance. When they hear that a policy has a two or five year benefit period, many of them believe that this means the policy expires after two or five years. In reality, most plans remain in effect until an individual turns 65. The two or five year figure refers to the length of time that a family will receive income from the life insurance company.
About two thirds of Australians believe that life insurance companies will look for loopholes in their policy in order to avoid paying the survivors when a claim is filed. This belief is also false. In reality, a major Australian life insurer only denies two percent of its claims, and most of these are for poorly defined trauma-related benefits, not death benefits.
It is also a mistake to assume that only the primary wage-earner should have a policy. In reality, if a non-working spouse loses their life, the working spouse will have to hire help or take time off from work to support the children. If both spouses work, cutting the income stream by a half or even a quarter or less can also be financially devastating.
One of the most common mistakes is to overestimate the cost of a life plan [http://www.guardianinsurance.com.au/Life-Insurance.aspx] and assume that a family can not afford it. In reality, a 45-year-old non-smoking male will only need to pay a premium of about $35 each month in most cases for a plan offering $300,000 of income for their family. Males aged 25 only pay about $25, and females about $18.
While most Australians say that they don't need life insurance, most also say that their family either would not cope well or at all if they lost their source of income.
One common misconception is the idea that the Australian government will take care of an individual's family after they die. About seven out of every ten Australians falsely believe that the government is obligated to offer financial support to their family if they die or are unable to work. In reality, the government is under no such obligation, and families will be forced to fend for themselves.
Many people also misunderstand the benefit period of life insurance. When they hear that a policy has a two or five year benefit period, many of them believe that this means the policy expires after two or five years. In reality, most plans remain in effect until an individual turns 65. The two or five year figure refers to the length of time that a family will receive income from the life insurance company.
About two thirds of Australians believe that life insurance companies will look for loopholes in their policy in order to avoid paying the survivors when a claim is filed. This belief is also false. In reality, a major Australian life insurer only denies two percent of its claims, and most of these are for poorly defined trauma-related benefits, not death benefits.
It is also a mistake to assume that only the primary wage-earner should have a policy. In reality, if a non-working spouse loses their life, the working spouse will have to hire help or take time off from work to support the children. If both spouses work, cutting the income stream by a half or even a quarter or less can also be financially devastating.
One of the most common mistakes is to overestimate the cost of a life plan [http://www.guardianinsurance.com.au/Life-Insurance.aspx] and assume that a family can not afford it. In reality, a 45-year-old non-smoking male will only need to pay a premium of about $35 each month in most cases for a plan offering $300,000 of income for their family. Males aged 25 only pay about $25, and females about $18.
While most Australians say that they don't need life insurance, most also say that their family either would not cope well or at all if they lost their source of income.
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