The research, commissioned by loan protection provider ALI Group, found that nearly a quarter (23 per cent) of the 1,000 survey respondents said they would rely on their family and social network for financial support should they lose their job or have a critical illness reduce their capacity to work. A further 32 per cent of respondents would have to sell an asset, such as their home.
The report follows research by ALI Group released earlier this year that found 56 per cent of Australians rank serious illness or job security as their main concern in paying off their mortgage.
Mortgagors under 30 were the most likely to turn to friends and family for support at 34 per cent, while 59 per cent of all female respondents and 49 per cent of all male respondents would rely on their partner’s income.
Speaking on the findings, CEO of ALI Group, Huy Truong, said: “Australia is one of the most underinsured countries in the world. So many of us follow a ‘she’ll be right’ mentality and feel comfortable just having health insurance, but neither of these are the answer for major illness or injury.
“We are not taking enough consideration for our own health and I truly believe we will soon face a crisis given house prices are increasing and most home borrowers are living pay cheque to pay cheque – a recipe for disaster.”
According to the research, nearly one-third of respondents did not have a life insurance policy, with 41 per cent of this group believing it to be unnecessary and 27 per cent finding it too expensive.
“Australians do not fully understand the vulnerable financial situation their mortgage puts them in,” Mr Truong added, noting that 64 per cent of respondents had never seen a financial planner and did not have a contingency plan should they become severely ill or unemployed.
“Serious illness or redundancy can happen at any time and many people don’t realise that their superannuation-held life insurance does not adequately protect their income in the case of illness or redundancy. You may only receive $100,000 or $200,000 in cover from your superannuation and while this might seem like a lot on paper, the reality is that if you are a homeowner with a family, you’ll actually need cover in the $500,000 to $1-million-plus price bracket.”