Life Insurance

Understanding risks: what we believe vs reality

05 Jul 2022

Life Insurance by Life Stage

The choices you make today can impact your long-term health, wealth and happiness. Understand the important role Life Insurance can play in key life events.

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Sharks and crocodiles have the uncanny ability to give many water-loving Aussie nightmares. This fear is often intensified by media reports and movies.

But do our fears match the facts?

There is a lot of research on how people are not very good at estimating true risks. Complementing this, a national research study published in 2022 by NobleOak (NobleOak’s Life Insurance Whitepaper – ‘Remarkable resilience and the case for optimism’ – March 2022) based on a survey of over 1,000 Australians asked respondents to rank the likelihood of risks they may face.

Unsurprisingly, the leading concerns were health-related, but it also showed a mismatch between perceived risks and reality.

The top four risks ranked in terms of likelihood by respondents as reported in the NobleOak Whitepaper research were:

Depression
Being diagnosed with cancer
Dying from cancer
Being in a car accident.

According to the Australian Bureau of Statistics (ABS) the five leading causes of death in Australia in 2020 were:

Ischaemic heart disease (IHD)
Dementia including Alzheimer’s disease
Cerebrovascular diseases
Lung cancer, and
Chronic lower respiratory diseases.

All causes of death are classified using the International Classification of Diseases.

Depression, which ranked #1 in the Whitepaper– up from #2 in 2020 – might be linked to a second year of COVID-19 impacts and restrictions. In 2020–21 the ABS documented 15% of Australians aged 16–85 years experienced high to very high levels of psychological distress. And concerningly, the most prevalent chronic conditions were mental and behavioural conditions (20.1%).

Being diagnosed with and/or dying from cancer ranked as #2 and #3. These fears are in tune with the Australian Institute of Health and Welfare data: “in 2021, an estimated 151,000 new cases of cancer will be diagnosed” and “an estimated 49,000 people will die from cancer”.

The chance of having a heart attack was ranked #5, similar to ABS 2020–21 prevalence of heart disease (which include heart attacks) at 4.0% – approximately 1 million people – increasing with age from 2.3% aged 45–54 years to 23.2% over 75 years.

However, it appears Australians are better at estimating chronic health risks than newsworthy risks. So, how does the risk of sharks, crocodiles and lightning strikes stack up?

In the 2022 Whitepaper the perceived risk ranking was:

#15 for struck by lightning
#16 for attack by shark or crocodile.

However, in Australia non-fatal shark bites are below 25 a year according to Culum Brown, professor and fish behaviour expert from Macquarie University. He said, “if you look at the things that are going to kill you in Australia, sharks wouldn’t make the top 100”. Crocodile bites (non-fatal) aren’t well registered but according to The Crocodile Chronicles media reports average them at 3 to 5 per year. The ABS recorded in 2020:

8 deaths from “contact with nonvenomous marine animal (W56)”; an average 4 per year; W56 includes sharks
0 deaths by crocodile (The Crocodile Chronicles reported 1 death in 2021)
1 death from a lightning strike.

There are some take-home messages from this Whitepaper. While Australians are pretty good at estimating some health risks (cancer) they underestimate others like dementia, the number 2 cause of death in Australia. It was ranked #10 in the Whitepaper.

Rather than fearing an improbable demise, Australians could consider the awful but less media-worthy events that are the leading causes of death and disease. Many people don’t realise that trauma insurance (which is a life insurance product) provides cover for many serious sicknesses and injuries.

The Whitepaper also found those who purchase life insurance have a greater appreciation of risk versus those without life insurance. Perhaps an increased awareness of life’s risks might lead to a deeper understanding about life insurance, which is about protecting against risks and uncertainty.

Getting a life insurance quote online can be a useful step for people who are thinking about what life insurance products they might acquire.

To find out more about NobleOak life insurance products or get a quote, call a NobleOak Life Australian-based insurance team member on 1300 014 494 or go online for a no-obligation quote.

This is general information only and does not take into consideration your individual circumstances, objectives, financial situation, or needs. Consider the PDS for the product, as well as the target market determination, available at www.nobleoak.com.au.