By Stuart Fagg, ninemsn Money
Australians are being urged to beef up their life insurance cover after it emerged that the average payout for the death of a partner is just $91,000.
Launching the Lifewise campaign, an industry-backed initiative to raise awareness of the issue of chronic personal underinsurance in Australia, Chris Pearce, shadow minister for financial services, superannuation and corporate law, said the financial ramifications of a death in the family can exacerbate the impact of a personal tragedy.
“Millions of hardworking Australian families are seeking to build wealth in order to fund lifestyles both this side- and perhaps more importantly- on the other side of the day they choose to retire,” Mr Pearce said. “An accident, injury, illness or death, can have a dramatic impact on the financial security of an individual or their family. These financial consequences often compound the emotional or physical trauma experienced.”
The Lifewise campaign was created by the Investment and Financial Services Association (IFSA) and the life insurance industry, but more than 50 organisations and individuals have signed up as supporters of the campaign.
IFSA deputy CEO John O’Shaunessy told ninemsn that concerns in the industry had been the catalyst behind the campaign.
“The origins of the campaign began in 2004,” he said. “Many CEOs of our member companies noticed they were paying claims that were inadequate for the families involved to maintain quality of life - paying $50,000 in a claim but knowing that they really need $500,000.”
In 2008, more than 13,000 families received an average payout of just $91,000 on the death of a partner, usually the family’s primary breadwinner. “Given the average family with young children has debts totaling $167,000, these levels of cover will not protect the majority of Australians from financial difficulty following this type of tragedy,” Mr O’Shaunessy said.
Ron Barr AM, founding director of Youth Insearch, said his organization frequently sees children whose lives would have been different had their parents had adequate life insurance.
“We often see kids whose families have disintegrated under the financial pressure that can follow the death of a parent,” he said.
As part of the campaign, a Lifewise website has been launched offering information, tools and life insurance resources. Visit www.lifewise.org.au for details.
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