What are you really covered for?

ARTICLE

24 March 2025

3 min read

Why life insurance is essential to your financial wellbeing.

When it comes to preparing for the unexpected, many Australians rely on health insurance, default life insurance through super, or their personal savings. While these are essential components of a financial plan, the reality is that these options alone rarely provide the comprehensive protection that tailored life insurance can offer.

So, what are you really covered for? And more importantly, what are you missing out on?

Let’s take a closer look at why life insurance is vital to securing your financial wellbeing.

I have health insurance, isn’t that enough?

Health insurance is important as it covers medical expenses, hospital stays, and other healthcare services not covered by Medicare, like dental and physio. While it is an integral part of a comprehensive financial strategy, it is worth noting that health insurance does not cover your family’s financial needs if you pass away or get seriously ill or injured and can no longer work.

Life insurance bridges that gap. It provides financial support to your family in the event of death, terminal illness, or total and permanent disability. This can help relieve the financial burden for your loved ones, ensuring they are financially secure should the worst happen.

I have default cover through my super, won’t that get me through?

While many superannuation funds automatically provide default cover to offer some level of protection in the event of death or disability, it is often not enough to fully protect you and your loved ones.

Default cover tends to be limited and is based on a set scale that may not reflect your actual needs. For example, you may be covered for a fixed sum that doesn’t adequately replace your income or pay off your debts. Plus, if you change jobs or your super balance drops below a certain threshold, you run the risk of losing your insurance.

Life insurance, on the other hand, can be adjusted to suit your specific needs. Whether it’s ensuring your family can maintain their lifestyle, covering the mortgage, or providing for your children’s education, a tailored policy can offer the right level of cover and peace of mind.

I think I have enough savings, so why do I need life insurance?

Having savings is a great start, and you should definitely continue to build your nest egg. However, relying solely on your savings is risky for many reasons.

Firstly, the amount you’ve saved may not be enough to cover all your expenses and your family’s future needs if something were to happen to you. You must consider if your savings can fully cover your family’s ongoing financial obligations like mortgage payments, everyday living expenses, and your children’s schooling.

Secondly, in most cases, your savings could run out quickly if you have ongoing medical bills or need long term care. Life insurance ensures that you don’t have to dip into your savings in a crisis.

Why life insurance matters

While health insurance, default cover through your super, and your savings are important pieces to your financial puzzle, life insurance completes the picture and offers comprehensive financial protection for you and your loved ones.

Talking to a financial planner can help you understand your situation, how much cover you might need, and tailor a financial plan according to your needs and goals. Alternatively, if you would just like to know more about AIA life insurance options and get a quote, our friendly team of consultants will be happy to take your call.

Disclaimer:
Copyright © 2025 AIA Financial Services Pty Limited (ABN 68 008 540 252, AFSL 231109), trading as AIA Financial Wellbeing. All rights reserved. This information is current at the date of this publication and is subject to change. This provides general information only, without taking into account factors like the objectives, financial situation, needs or personal circumstances of any individual and is not intended to be financial, legal, tax, health, medical, nutritional or other advice. Before acting on the information in this publication, individuals should consider its appropriateness having regard to such factors.