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Rice Warner flags protection gap

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The life insurance gap remains significant among the working-age population, according to actuary Rice Warner’s latest analysis using updated census data.

It is estimated 94% of working Australians have some level of life cover, with an average amount of about $344,500 – about 4.5 times median household income.

The median coverage is about $143,500, which is only twice median household income.

The proportion of workers with total and permanent disability (TPD) cover is slightly below life insurance at 81%.  

The average and median TPD cover amounts are only $237,000 (three times median household income) and $99,500 (less than 1.5 times median household income) respectively.

The gap in income protection cover is the worst, with only one-third of the working population insured. The average cover is reasonable, at 75% of median household income. The median level insured is only about 36%.

Rice Warner estimates insurance needs for 30-year-old parents with children are eight times family income for life insurance, four times family income for TPD and 85% of family earnings for income protection.