Are you falling into a coverage gap?
Know if you’ve fallen into an insurance coverage gap
What you need to know about coverage gaps
A coverage gap (also known as underinsurance) occurs when the coverage you’ve paid for doesn’t match the level of insurance you need to replace your income. While this sounds simple enough to avoid, you may be underinsured right now and not even know it.The average Australian family would just have 47% of their basic needs met if they made a life insurance claim. That’s less than 50% coverage for just the basics. When you look at what’s needed to maintain your actual lifestyle, that percentage falls to 28%. Whichever way you look at it, that’s quite a gap.
Why you might be in a coverage gap
If your life cover is provided as part of your super fund, there’s a good chance you’re in a coverage gap. While this type of life insurance is easier and cheaper to obtain, the default level of cover provided by your super fund just isn’t enough to provide full coverage for your family. The recommended level of life insurance required to cover your family’s needs is 8 x your annual family income. If your life insurance policy doesn’t cover this amount (it most likely won’t if you’re in a default fund), then you’re in a coverage gap.
How a life insurance adviser can help
The best way to ease your mind and ensure you’re fully covered is to speak to an experienced life insurance adviser. Life insurance is not the easiest thing to get your head around, so it makes sense to get guidance from an expert.Having a trusted life insurance adviser on hand makes it easy to update your coverage over time, so you avoid coverage gaps and underinsurance in the future. Adding to your family, buying a new home or getting a promotion all have an impact on your life insurance needs.
How to avoid coverage gaps and underinsurance
The first step is to review your current life insurance policy to check your level of coverage. If it doesn’t cover 8x your annual family income, it’s time to do something about it. Contact a life insurance adviser to find a more tailored policy to suit your needs. Life insurance isn’t set and forget. Starting a family, upgrading your house and changing jobs will affect your life insurance needs over time. Regularly review your policy and make adjustments to ensure you don’t find yourself in an insurance gap when it matters most.
The benefits of full coverage
Can you put a price on peace of mind? With the right insurance coverage you won’t have to worry about your family struggling to meet less than 50% of their basic needs. You’ll be free to live your life to the fullest and enjoy every amazing moment along the way. Sounds good, huh?
Check your coverage now
Trust us, ignoring a potential coverage gap won’t make it go away. Get out your policy and confirm your current cover. If you’re not sure whether it’s enough, or you can’t understand your PDS, talk to Skye.
