Australia: After 'death do us part' - What next?

Australians currently owe A$840 billion, or A$42,000 for every man, woman and child[1], yet most of us are under insured, leaving families at risk of a financial black hole if the prime breadwinner becomes ill or dies.

Rob Donaghy, Navigator’s group director products, marketing and public affairs, says Australians need to ensure they and their families are financially protected against long term sickness and, in the worst case, death of the main bread winner.

“Australians should have a quality life insurance product at the core of their long term financial plan.

"Under the Financial Services Reform Act introduced in 2003, it is now mandatory for financial advisers to analyse their clients’ life insurance needs. If it is not offered in the first place, they should ask themselves if they are seeing the right person,” said Rob.

Losing the main breadwinners’ income can lead to great financial hardship for a family. The average full time salary for men in Australia is currently A$52,000 and A$44,500 for women[2]. This, and the ongoing annual income, is a substantial sum to lose.

Unfortunately the "it’s not going to happen to me" belief many people hold is simply not the case. While life expectancy rates are on the increase there are still major health issues stopping people from earning an income.

For example, one-in-two 40 year old men will suffer from coronary heart disease in their lifetime[3] and 25% of stroke victims are under 65[4].

Taking significant time off work due to accident or illness is a very real issue for many people - one-in-six of the working population is expected to suffer a disability from the age of 35 to 65 that causes a loss of six months or more from work[5].

“In the past, life insurance was often the only financial product a family might have. Now people have access to a wide range of sophisticated investment products but sometimes forget about their protection needs,” said Rob.

“Financial advisers have heeded the message and clients now need to do the same thing – wealth protection, be it life insurance or an income protection product, is important to financial longevity,” said Rob.

When considering what sort of wealth protection product will best suit your family the first thing to do is estimate the money your family would need if they didn’t have the income from the main breadwinner.

As a rule of thumb you may assume you need an annual income of approximately 75% of their current salary. However this can change at different life stages, for example expensive school fees will increase expenditure.

It is also essential to estimate the amount of money needed to pay off debts, including medical expenses and mortgages. Right now, the average size of a home mortgage is A$189,000[6], and in most cases it is important to clear the mortgage.

For most people, life insurance is not an expensive option. A 40 year old, non-smoking healthy male will pay approximately A$20 a week for Death and Trauma life insurance cover of A$800,000 and women of the same age are looking at about A$17 a week[7].

“It is important to get it right. You insure your house and car against risk and that is exactly what you need to do with your life and your income – it’s about peace of mind for the future – ensuring your family is financially secure at a time when they need it most,” said Rob.

A financial adviser can assist in creating a financial plan which considers all your wealth protection and investment needs.

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For further information please contact:
Simon Morgan
Group General Manager Public Affairs
Phone: (03) 9829 8892
Mobile: 0407 966 632

Notes to editors:

• Aviva Australia is a group of two specialist financial services companies: Navigator and Norwich Union Life Australia Ltd. Portfolio Partners is the Australian funds management arm of Aviva plc. Through these companies we provide products and services in the areas of wealth creation and wealth protection for more than 300,000 customers throughout Australia.
• Globally, Aviva Australia is part of Aviva plc, the world’s sixth largest insurance group, the largest insurer in the UK and one of the top five life companies in Europe. Aviva was formed in May 2000 through the global merger of CGU plc and Norwich Union plc.
• Aviva is a leading provider of life and pensions products to Europe and has substantial businesses elsewhere around the world. Its main activities are long-term savings, fund management and general insurance. It has premium income and investment sales from continuing operations of A$78.6 billion, and more than A$645 billion of assets under management (as at 7July 2005). The group has more than 60,000 employees and 30 million customers worldwide.
• The information in this document reflects Navigator Australia Limited's ('Navigator’) understanding of existing legislation, proposed legislation, rulings etc as at the date of issue. In some cases the information has been provided to us by third parties. While it is believed the information is accurate and reliable, this is not guaranteed in any way. The information given in this document is of a general nature and has not taken into account the investment objectives, financial situation or particular needs of any particular person and it is not a substitute for professional advice. Applications to invest in a financial product issued by Navigator, or any of its related entities, must be made by completing the application form attached to the applicable Product Disclosure Statement ("PDS"). A PDS is available from Navigator or your financial adviser. Before making an investment decision on the basis of the information above, a prospective investor needs to consider, with or without the assistance of a professional adviser whether the information is appropriate in the light of their particular investment needs, objectives and financial circumstances. Aviva does not receive any remuneration in relation to the provision of information available from this press release which is of a general nature only.