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As a financial planner I struggle to understand the approach many people have when it comes to insurance... namely that it's something they don’t need, that claims aren’t paid or that it's wasted money.

Check out these stats:

1.       Only 4% of Australian families with dependent children have adequate cover

2.       Only 22% of working Australians insure their ability to earn an income

3.       The average life insurance claim paid from an employer default fund is only $70,000

4.       The cost to the Government for underinsurance is a massive $140 million for death insurance per year, $74 million for Income Protection insurance per year and $1.183 million for Total and Permanent Disability insurance per year

5.       43% of people think home and contents and 41% of people think car insurance is more important than life insurance.

The most common reasons for not having insurance are:

1.       I cant afford it.

Life, Total and Permanent Disability and Income Protection can be paid via your superannuation fund so you can be insured with no impact on your cash flow. There are many strategies that can be used to then top up your superannuation, including salary sacrifice super contributions, spouse contributions and government co-contribution. Insurance can be structured in many different ways to suit your own personal circumstances so the trick is to get the right advice.

2.       I don’t trust insurance companies to pay my claim.

Insurance claims do get made. Australia’s largest insurer Comminsure, paid out $608 million in 2010. Payments included;

- $256 million in death benefits

- $124 million in Income Protection and Business Expense insurance

- $155 million in Total and Permanent Disability insurance

- $72 million in Trauma claims.

These payments have helped many Australian’s reorganise their lives and financial affairs.

3.       If I couldn’t work then Workers Compensation will cover me or I could claim Centrelink entitlements.

Many self employed people don’t have Workers Compensation. The Centrelink Disability Pension would pay around $13,148 per annum for a couple, $17,443 per annum to a single person or $424 per fortnight Sickness Allowance. Workers Compensation will only cover you for injury at work, whereas income protection will cover against all injury and illness.

4.       If I die, my partner can sell the house.

Do you really want your family to be forced to sell their home and move to a smaller home in an unknown area? The cost to sell a property and purchase another will often mean you're left with much less money than you may need.

Afterall, insurance isn’t about you. It's about protecting those close to you.

If you were to get sick, injured or die, your family and loved ones could remain living in their own home, go to their chosen schools and not be restricted by debt or financial problems simply because you'd invested in insurance.

The best financial investment you can make isn’t in the share market or the property market – it’s in you and your family!

Rebecca is a Premium member of Business Chicks, request her online business card and connect with her here

Rebecca Howarth is a home based financial planner, educator of underinsurance issues for women and families and a devoted mum of two girls.