The survey showed the average Australian has a child at 31 and buys a first home at 34. With Generation Y currently aged 25 – 35, many Gen Yers are now or soon will be facing these life-changing events.
According to the survey, only 20% of Gen Y seeks regular financial advice. Asteron Life says Australians are missing the opportunity to take control of their financial futures by leaving planning until they experience these life-changing events. Executive Manager Mark Vilo said younger Australians would benefit from creating a financial plan earlier.
On the other end of the spectrum, 39% of Australians said “getting older” prompted them to buy life insurance.
Other reasons life insurance is important
The Asteron Life survey showed buying a home was another trigger for Australians to consider income protection, a type of life insurance. 46% said taking up a mortgage was the reason they bought income protection.
This was confirmed in a nationwide Galaxy Research survey commissioned by Australia’s largest life insurance provider, TAL. Two thirds of respondents told Galaxy they think life insurance can protect the things they have created in life and their dreams for the future. The people who were most likely to buy life insurance were those with a mortgage at 74%, Generation X at 73%, and self-proclaimed “risk takers” at 71%.
TAL Group CEO Jim Minto said, “Those who have a mortgage or who have worked hard to save money are conscious that they need to protect their dreams in order to avoid losing everything should their income stop due to injury or illness.”
Once people own their own home, life insurance becomes less important, with only 56% saying they believe in life insurance compared to 74% of those with a mortgage and 63% of those who rent. This is reflected almost exactly in generational demographics: Baby Boomers are less likely to agree that life insurance can protect their dreams, at 59%, compared to 73% of Gen X and 68% of Gen Y.
Of the 1 in 3 Aussies who say they don’t believe in using life insurance to protect their dreams, 34% said “money isn’t everything” instead, while 25% said “once I’m gone financial obligations will be out of my hands”.
Mr Minto said these views are concerning because it meant a third of Australian parents may not have considered the financial impact on their families should they be unable to work because of illness, disability or death. He said life insurance is not about protecting your money – it is a lump sump or payment scheme that “can help tide us through difficult times”.
22% of those who said life insurance couldn’t protect them said they would like to have good life insurance cover, but sadly they cannot afford it.
Taking stock of your financial position
Asteron Life lifestyle coach Tenar Larsen Roberts suggests that readers conduct a mid-year financial health check now, perhaps when you’re filing your taxes. She says, “Getting some financial advice specific to your lifestyle and values can go a long way in giving you a greater sense of control and freedom. It may give you greater confidence to pursue the things you really want like a family, home ownership or starting your own business.”
Regardless of our stage of life, some form of life insurance is helpful. A life insurance payout can be used for many helpful things by you if you are too sick to work or by your family if you pass away:
- Fund medical treatment or rehabilitation costs
- Pay off the mortgage and other debts
- Meet ongoing household expenses
- Pay for school and uni fees
- Pay for extra child care or home services
- Cover the cost of funeral expenses
As AAMI Insurance says, “The real question is, can you afford not to have life insurance?”
You can compare different brands of life insurance and income protection policy on Canstar’s website.