Revealed: The top 3 reasons Australians need life insurance

By Grace Ormsby

July 29 2020
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It’s life insurance awareness week, and so the Financial Services Council has taken the opportunity to highlight the most common causes of life insurance claims using KPMG analysis of Australian insurance data.

According to the Financial Services Council’s senior policy manager for life insurance, Nick Kirwan, new claims statistics tell us a lot about the difference between men and women.

Life insurance:

Life insurance pays a lump sum on your death or the diagnosis of a terminal illness.

The top cause of death claims in Australia, according to the data, is cancer. This is true for both men and women – but the differences are still stark.

For men, it accounts for 39 per cent of all death claims.

For women – this figure is up at 61 per cent, of which 29 per cent relates to breast cancer. Colon cancer (15 per cent) and lung cancer (14 per cent) also make up high proportions.

For men, accidents are the second most common cause of death-related claims – at 20 per cent.

Circulatory system issues account for the third highest proportion of claims for men – at 16 per cent, while this is the second most common cause of death claim for women, at 9 per cent of all life insurance claims.

For women, accidents come in third place – at just 7 per cent of all claims.

TPD insurance:

Total and permanent disability (TPD) insurance pays out a lump sum to individuals who are not expected to be well enough to work ever again due to illness or injury.

For both men and women, mental disorders accounted for the highest proportion of claims.

For men, just under one-quarter (24 per cent) were attributable to mental health, while it was slightly higher for women, at 27 per cent.

Accidents were again ranked in second for men, this time tying with issues of the musculoskeletal system at 17 per cent of all TPD cases apiece.

For women, musculoskeletal system issues (19 per cent) just beat out issues of the nervous system, which was the third most claimed against concern – at 16 per cent.

Income protection:

Income protection insurance pays an individual an income after an initial waiting period if that person is not well enough to work due to illness or injury.

Proving accidents are very worthy of insurance protection, the category this time topped the proportion of claims for both men (38 per cent) and women (28 per cent).

Cancer and musculoskeletal system claims were tied in second place for claims by men (12 per cent each), while for women, 22 per cent of income protection claims related to mental disorders and a further 16 per cent related to cancer.

Commenting on the data, Mr Kirwan said the data “confirms that for working age Australians, cancer is by far the biggest killer and it’s even more deadly for women than for men”.

“We see that men have significantly more accidents than women, and women more mental health claims.”

The senior policy manager is encouraging all Australians to check on what life insurance cover they have: “Be aware of what you have and what you’re paying for.”

“Give your superannuation trustee or life insurance company a call today so you and your family are secure no matter what happens,” he concluded.

About the author

Grace Ormsby

Grace is a journalist on Momentum Media's nestegg. She enjoys being able to provide easy to digest information and practical tips for Australians with regard to their wealth, as well as having a platform on which to engage leading experts and commentators and leverage their insight.

About the author

Grace Ormsby

Grace is a journalist on Momentum Media's nestegg. She enjoys being able to provide easy to digest information and practical tips for Australians with regard to their wealth, as well as having a platform on which to engage leading experts and commentators and leverage their insight.

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