Income insurance misunderstood: study

Most Australians do not understand income protection insurance, and either aren’t covered or have insufficient cover, according to a new study.

The survey, conducted for CommInsure, found that 67 per cent of Australians have either no income protection insurance or that they have income protection cover for up to two years as part of their superannuation arrangement.

The study also found two in three Australians aged between 25 and 49 would be reliant upon Government welfare if they lost their income, despite half of these people having a mortgage or dependent children.

Commenting on the outcome of the survey, the managing director of CommInsure, Simon Swanson, said that with one in three Australians expecting to be off work for more than three months during their working life due to illness or injury, they were leaving themselves open to a worrying situation.

“When it comes to insurance, income protection is either overlooked or misunderstood,” Swanson said.

“Most people surveyed are not aware that income protection is generally tax deductible and, in the case of an injury or illness that prevents one from working, can provide payments up until the age of 65.”

Swanson said the study showed that many of those with income protection insurance (55 per cent) were unaware of how long payments from it would continue and that for someone with a long-term injury or illness this might not go very far.

“With about 116,700 Australians today permanently unable to work due to illness or injury, people need to be aware of what level of protection they will receive should they require income cover,” he said.