Research shows that Australians are underinsured which has led to the proliferation of television advertisements promoting personal insurance cover. Are these quick and easy plans suitable for your family?

Research undertaken by Rice Warner in 2015 revealed that on average Australians had Life and Income Protection insurance meeting only 61% and 16% of their needs respectively. Cover for Total and Permanent Disability was as little as 13% of people’s needs.

The cause may be attributed to peoples’ uncertainties surrounding medical examinations, probing application forms, costly plans and persistent sales people.

Companies advertising on television attempt to eliminate some of these fears and often advertise products where:

• cover will generally be accepted without a medical examination,
• policies are easily arranged on-line or via a single telephone call, and
• premiums are competitive.

For some people, these plans offer a practical solution; particularly older people, perhaps without dependents, who no longer have large financial commitments.

But if you have dependent children, a mortgage and other monetary obligations, and you wish to plan ahead for your family’s financial future, would a do-it-yourself product suit your needs?

Ask yourself the following questions:

• How can I know how much insurance I really need?
• How do I ensure my family won’t be financially worse off after an insurable event?
• Would the family home need to be sold if the household income was reduced?
• How do I ensure my children can afford the right education to start them off in life?
• What if I became sick or injured and was unable to work for a significant period?

If these issues concern you then it’s likely that you need a more tailored risk management plan.

Discussing your circumstances with your financial adviser will ensure that your particular needs and goals are addressed. And as your situation changes, for example, welcoming a new child, your adviser can review your plan and update it as necessary.

Most people recognise the importance of car or home insurance, but neglect to consider their lives or their ability to earn an income. Given this, off-the-shelf insurance products fulfil their purpose as it can be said that encouraging people to take out some insurance is better than having no insurance.

But if a risk management plan specific to your family’s future security is important to you, it might take more than a short phone call to arrange, while the peace of mind it brings will last a lot longer.