Apathy towards income protection

Five out of six Australians have inadequate insurance cover to guard against the loss of their income in the event of illness or injury, according to a survey conducted by the Commonwealth Bank’s insurance arm CommInsure.

“Many people choose to protect their homes and their cars, a larger proportion however, overlook the protection of and even more important asset - their income,” CommInsure managing director Simon Swanson said.

The study found this ignorance had a big impact on the played a large part in determining the results with 34 per cent of respondents admitting they did not know enough about the subject and a further 15 per cent citing this as the reason they had not taken out an income protection insurance policy.

“Of concern to us is that nearly half of the respondents said that affordability was the main reason they did not have income protection insurance but many Australians don’t realise that it’s possible to protect your income from as little as $2 a day,” Swanson said.

He felt the lack of knowledge about income protection stemmed from the fact that less than 75 per cent of respondents had engaged the services of a financial planner.

In the event of losing their income for three months 31 per cent of consumers indicated they would rely on savings to manage the situation, 21 per cent said they would rely on government welfare and 20 per cent revealed they would rely on family members to help them out.

According to Swanson another alarming statistic was the level of financial commitments people were servicing with their potentially unprotected income. The research showed 41 per cent of respondents have a home loan, 34 per cent have dependant children, 57 per cent have debts other than their home loan and 49 per cent were the sole bread winner in the household.