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For many single people, having insurance cover in place for their home and contents, motor vehicle and health are the three most important considerations when it comes to having adequate risk protection.
Unfortunately, while these insurances are all very important, considerably less thought is put into making sure that there is also insurance cover to pay for everyday living costs, should they become totally and permanently disabled, or suffer a major critical illness.
Changes to your lifestyle, including home and mobility, can be costly to manage, and the need for long-term care is generally very expensive. So who will pay the bills if you’re single?
Even if you get married, and there is more than one income earner in the household, the financial burden of losing income can be enormous. But, increasingly, many people are choosing to live single lives. In this situation, there is generally no income back-up at all if you suddenly have to stop work. For example, if you are diagnosed with a critical illness such as breast cancer or suffer a stroke, you could be left in an entirely different situation than a person with a partner.
Without a joint income, single people are more reliant on their income for debt repayments and other living costs.
In Australia, a 35 year old male has more than twice as much chance of suffering a critical illness compared with the risk of dying. If they are single, the financial effects could be substantial.
Some singles will currently find they are extremely under-insured against critical illness. Various surveys of individuals in Austrlia have shown that a high percentage of people do not have sufficient insurance in place to cover their current income, leaving them with a huge funding gap should they be forced to stop work.
Unfortunately other income streams, such as social security, sick leave, workers’ compensation and superannuation provide only a limited level of financial support.
Whether caused by ill health or an accident, disabilities are almost always unforeseen and can seriously impair your ability to function in the same way you did before. While they don’t necessarily have to affect your long term enjoyment of life, they can often have an enormous financial impact.
The cost of medical assistance can be substantial, and restrictions on work and education can severely affect your capacity to earn a living.
Two single questions that could change your life
1. Have you insured yourself for disability?
The financial costs of disability can be high. One of the best ways to prepare for this cost is to transfer the risk to an insurance company.
Total and Permanent Disability (TPD) insurance covers you for disabilities that permanently prevent you from ever working again. TPD is normally paid as a lump sum. Note that many TPD insurance policies require up to six months of total and permanent disability before paying a benefit.
2. Have you insured yourself for critical illness?
Critical illness insurance can help you cope financially with the affect that a medical trauma, such as a stroke, can have on your life. Critical illness insurance is normally paid as a lump sum and can be used to pay for changes to your lifestyle or for care that you may require because of the trauma.
If you believe you may be under insured or would like to review your insurance cover, please contact your financial adviser.
The 2001 Census revealed about one fifth of all Australians are living alone, and the Australian Bureau of Statistics predicts that in 20 years the number of single-person households will increase by up to 105%.
What’s more, 9% of households have single occupants, and the average household size will drop from 2.6 to 2.3 people during the same time. (Source: The Age, October 2005).
Issued by Aviva (Aviva Australia Holdings Ltd ABN 38 095 045 784 and its related companies and entities)
*Disclaimer: The information contained in this article is of a general nature only. It does not take into account your particular objectives, financial situation or needs. Before making an investment decision, you need to consider, with or without the assistance of a financial adviser, whether the information is appropriate for your particular needs, objectives and financial circumstances. |
