If you only view one blog on insurance statistics today, make it this one.

Coming up to June 30, everyone thinks about tax (don’t they?).

Unfortunately, it may be too late to do too much for this year (but you could try planning now for next year). More importantly, other important areas are overlooked.

There is no question that tax plays an important role in your wealth management objectives. But more important in my mind, is ensuring the security of your income. For most people, the most appropriate way to do this is via life insurance.

While life insurance is vital, it is regularly overlooked, and an area that people regularly don’t discuss.

Rather than talk about the reasons why insurance is so important, I thought instead that I would post some statistics on claim payouts for the 2011 year, courtesy of the Risk Store.

Product	Term	TPD	Trauma	Income Protection	Total
$ Paid	$1.8B	$629M	$538M	$1B	$3.9B
No. of Claims	18,197	6,930	3,169	34,056	62,353

When business expense cover is added, the totals reach $4 Billion in paid claims and 62,681 individual claims paid.

That sounds like a lot, but to me there are other issues that come to mind.

If the $4 billion dollars wasn’t funded by insurance, where else would it have come from?

How many of these people said ‘it won’t happen to me’?

These aren’t one off statistics. Over the last 6 years nearly $19 billion dollars has been paid in claims.

But with all that said, there is still one statistic that I find the most concerning. Have you guessed what it is?

The average claim is $63,528. ‘Valuing a life’ is not easy, and while something is better than nothing, my guess is for most people, receiving $63,000 on the death or serious illness or injury of a loved one would see them in significant financial hardship.

She'll be right - Part 2

What is your most important asset? Your house? Your super? How about your ability to earn an income, or to perform household tasks without having to pay for them?

Research has consistently shown Australians don’t take out adequate levels of insurance to protect themselves and their family. While most people would never consider driving a car without motor insurance, less than a third of us insure our most important asset – our ability to earn an income.

If you own a house, then chances are, you have home insurance. In fact, in 12 years, I have not met a single homeowner who doesn't. If you are a homeowner, you probably took out cover becauue you do not want to lose your house in the event of unforseen circumstances. Yet, how long would you be able to keep your house if you weren't receiving any income, or in the event of being diagnosed with a critical illness or accident.

Research commissioned by IFSA in 2005 showed parents with dependents were critically underinsured by $1.37 trillion. Thinking of that another way – only 4% of the total population with dependent children have adequate levels of Life Insurance cover.

More than three in four Australians will be diagnosed with a serious illness in their working life. The majority of us will rely on savings, selling assets in a depressed market or government welfare. And a significant proportion of Australians would face financial hardship if they were to have an accident, become sick or die.

Worringly, The ING Research Optimistic Australians report (December 2008) surveyed the opinions of Australians aged 25 to 65 and found:

* 89% said they were not likely to have an accident (making them unable to work) in the next 20 years
* 80% said they were not likely to suffer a serious illness in the next 20 years
* 83% did not expect to pass away in the next 20 years

So, research tells us that the vast majority of Australians think 'she'll be right' when it comes to insurance, but that 3 in 4 will need it. Oh, and at odds like 3 in 4, it doesn't seem like a matter of insurance 'just in case' any more, but rather insuring for the distinct possibility that you will have an issue.

There are a number of reasons why people don't have insurance, including a lack of awareness, a feeling that it is too complicated, and thinking that what they may have in their super fund is 'enough'. However, the main reason may be the perception that life insurance is too expensive. ING research says that - 81% of respondents thought that life insurance is too expensive. Interestingly, 61% over estimated the cost of insurance.

Finally, 63% of people with a partner say that they have not discussed life insurance with their partner, with a large proportion saying it is becasue it is too unpleasant to discuss. Not nearly as unpleasant as the alternatives.