Tradies fail to nail life insurance

Study reveals tradespeople are well below the national average in taking up life cover, writes Anthony Keane

LABOURERS and tradespeople are the least likely to have life insurance or income protection insurance despite their greater chance of getting hurt at work, new research has found.

Just 43 per cent of them protect themselves with personal insurance, according to a study by life insurer NobleOak. This is well below the national average of 55 per cent, and even further below professionals such as doctors and lawyers, at 68 per cent.

More than 60 per cent of office workers have cover, while 55 per cent of stay-at-home parents do. Life insurance is an umbrella term encompassing income protection insurance, term life insurance which pays when you die, total and permanent disability insurance, and critical illness insurance.

“It’s surprising that life insurance or income protection insurance isn’t part of a tradie’s toolkit, especially when they are working with power tools and up ladders on a daily basis,” NobleOak CEO Anthony Brown said.

Financial planners and insurance companies have always found it tough to motivate people to think about the chance they might get sick, injured or die, and this is a key factor keeping people away. “A lot of them are younger and may think they are bulletproof as well,” Mr Brown said. Cost is a key factor. While death cover premiums don’t change depending on your occupation, income protection is priced according to the potential dangers of your job, and can be between 20 and 200 per cent more expensive for a tradesperson or labourer than for a professional. “Their income protection premiums are higher because they claim more often,” Mr Brown said. Wotherspoon Wealth MONDAY, OCTOBER 30, 2017 director Simon Wotherspoon agreed that cost could be a barrier, but the higher premiums illustrated that many blue collar workers needed the insurance more.

“Insurers are just pricing risk, and people in those occupations have higher risk of injury,” he said.

“Insurers don’t necessarily want them, but I would look at it the other way – they should purchase insurance because clearly it’s in their best interests to have it.”

Mr Wotherspoon said the biggest asset for many workers – particularly early to midcareer – was their future income. “People insure their tools and their cars, and when their biggest asset is their ability to earn an income, they should make sure they’re covered.”

Life insurance as well as total and permanent disability insurance (TPD) can be bought inside super to lower your outof-pocket costs, but advisers generally recommend buying income protection outside super because premiums are tax-deductible.

If cash flow is a problem, income protection can also be purchased inside super.

NobleOak’s Mr Brown said people should check ASIC’s moneysmart.gov.au site to learn about how life insurance works, and could compare premiums and policy details on sites such as canstar.com.au.