Most people would know of someone that has been impacted by a tragedy such as the death of a family member or the diagnosis of a serious illness.  Those affected would also understand the financial impact an event like this can have on the life of not just that person but also those close them.

Sadly, the underinsurance statistics are alarming. A report by Lifewise and the National Centre for Social and Economic Modelling (NATSEM) found that 95% of Australian families do not have adequate levels of personal insurance.

One in five families will be impacted by the death or disability due to illness or accident of a family member that results in a loss of family income and/or significant out of pocket medical and other costs.

The typical Australian family will lose at least half of their income as a result of serious illness, injury or death as a result of underinsurance.

The research examined various scenarios of a typical family of two parents and two children and how they were impacted by underinsurance.

Imagine this. John and Penny have 2 young children. Penny is a stay at home mum. They are like any family – mortgage, expenses, lifestyle requirements with little savings. John thinks he has some cover in his super. Penny does not have any as, when she stopped working, her cover lapsed.

Penny receives the news she has cancer. She will need surgery and 6 months treatment. There will be substantial out of pocket medical expenses including specialists, costs of medication and domestic assistance to help to do the things that she used to do. In addition, John would like to take some unpaid leave from work to be with his family. This will be almost impossible to fund with their limited savings.

While Penny is recovering who will be able to take care of the household and children? If John and Penny had adequate insurance in place there might by funds available to either allow John to take some unpaid leave to look after the children and help around the house, or to get some paid assistance. This would allow Penny to focus on getting better and not to worry about the financial impact this unfortunately increasingly common health event will have on her family.

What would your situation look like if a member of your family was to suffer from a sickness or accident?

If you would like a copy of this report or to discuss with an adviser please call 1300 ELSTON.