Why Aussies Buy Car Insurance but Skip Life Cover
- charlielojera
- 9 hours ago
- 5 min read
You’ll hear it at any BBQ or footy catch-up: “Of course I’ve got insurance on the ute.” Yet when the topic turns to personal cover, the room goes quiet. It’s a curious pattern across Australia. Many motorists won’t drive a kilometre without protecting their vehicle, but a surprising number haven’t arranged protection for their family’s future.
This blog looks at the real reasons behind that choice, with honest insight into behaviour, money worries, and the way Australians think about risk.
The Everyday Reality of Car Insurance in Australia
Car insurance feels normal because it’s part of daily life. You register a vehicle, compare quotes, tick a few boxes, and you’re done.
There are a few reasons why this kind of cover feels automatic:
Legal pressure: Compulsory third-party cover is required to register a vehicle in most states.
Loan requirements: If you finance a car, lenders often insist on comprehensive cover.
Visible risk: A dented bumper or smashed windscreen is easy to imagine.
Immediate inconvenience: Losing a car affects work, school runs, and errands.
Insurance companies have built simple online tools and advertising that makes this decision easy and routine.
By contrast, personal cover doesn’t sit in your day-to-day routine.
Why Life Insurance Gets Pushed Aside
1. It’s Not Legally Required
No law says you must insure your life to protect your family. Without that push, it becomes an optional expense. And optional expenses often get delayed. In contrast, motorists must organise cover to legally drive, which creates urgency.
2. We’re Wired to Think Short Term
Humans are naturally biased toward immediate risks. You can see your car parked in the driveway. You can imagine a crash on the M1. But imagining your family’s finances years down the track feels distant. Behavioural economists call this present bias, we prioritise today over tomorrow.
3. It’s Harder to Understand
Policies for cars are straightforward:
Market value or agreed value
Excess amount
Third-party vs comprehensive
Personal cover can involve:
Income protection
Total and permanent disability
Trauma cover
Term life vs whole life
Without clear understanding, many people avoid the decision entirely.
The Emotional Side People Don’t Talk About
Thinking about personal cover means thinking about illness, accidents, and death. That’s uncomfortable. Australians are famously practical, but when a decision feels emotional, it’s easier to postpone.
Common thoughts include:
“I’m still young.”
“I’m healthy.”
“I’ll sort it next year.”
“Nothing will happen to me.”
This mindset isn’t irrational, it’s human.
Cost Perception vs Reality
Many people believe personal cover is expensive. Sometimes that’s true, especially with higher cover amounts or pre-existing health conditions. But perception doesn’t always match reality. According to insights often referenced by the Australian Securities and Investments Commission, Australians frequently overestimate the cost of insurance products and underestimate their need for them.
A few reasons why costs feel higher than they are:
People only hear worst-case premiums.
They don’t compare policies.
They assume cover must be large.
They ignore superannuation-based options.
Meanwhile, car cover is advertised everywhere with price comparisons and discounts.
Car Insurance Protects Assets, Not People
Another reason comes down to what we value in the moment. A car is a visible asset. It’s something you worked hard to buy. Losing it feels personal. But the biggest financial asset most families rely on is income.
If a wage earner can’t work, the financial impact can be huge:
Mortgage repayments
School fees
Groceries and bills
Medical costs
Rent or relocation
Statistics from the Australian Bureau of Statistics consistently show many households would struggle after losing a primary income. Yet that risk is harder to picture than a car crash.
Social Norms and Marketing
Car insurance companies advertise during footy games, on YouTube, and across billboards. It’s normalised.
Personal cover is marketed differently, often through advisers or super funds.
That difference shapes behaviour.
People tend to do what their friends and family do. If no one in your circle talks about personal cover, it feels unnecessary.
Trust and Complexity
Some Australians worry about claim disputes or exclusions.
They’ve heard stories like:
Claims rejected for fine-print reasons
Premiums rising over time
Confusing policy terms
That fear makes people hesitate. Car claims are easier to understand: you crash, you claim. It feels fairer and clearer.
The Role of Superannuation
Many Australians actually have some personal cover through their super fund without realising it.
But they don’t know:
How much cover they have
Whether it’s enough
What exclusions apply
Because it’s invisible, it’s not top of mind.
Common Myths That Hold People Back
Myth 1: “I Don’t Need It Because I’m Single”
Even singles can have debts, parents relying on them, or future family plans.
Myth 2: “My Job Covers Me”
Workplace cover often ends when you change jobs.
Myth 3: “I’m Too Young”
Younger people usually pay less, not more.
Myth 4: “It Won’t Pay Out”
Most claims are paid when policies are correctly set up.
When Personal Cover Matters Most
Life changes are the right time to review your protection:
Buying a home
Having children
Getting married or divorced
Starting a business
Taking on major debt
If people insure a $30,000 car, it’s worth asking whether a million-dollar income stream deserves attention too.
A Practical Way to Think About It
Instead of comparing cars to people, think about responsibilities.
Ask yourself:
Who depends on my income?
How long could we survive without it?
What debts would remain?
Would my partner need time off work?
If the answers worry you, it’s worth exploring options.
Simple Steps for Australians Considering Personal Cover
Check your super fund first.
See what’s already included.
Calculate your needs.
Consider mortgage, school costs, and daily expenses.
Compare policies.
Look at exclusions and waiting periods.
Talk to an adviser if needed.
A licensed planner can explain options.
Review every few years.
Life changes quickly.
Why People Eventually Decide to Get Covered
Most Australians who arrange personal cover do so after a life event.
Common triggers include:
A mate getting sick
A child being born
Buying a first home
Seeing parents struggle financially
Real stories make the risk real.
The Bottom Line
Australians don’t ignore personal cover because they’re careless. They do it because:
It’s not required.
It’s uncomfortable to think about.
It seems expensive.
It’s complicated.
It’s less visible than a car accident.
Understanding those reasons helps people make better decisions for their families.
Protecting a vehicle makes sense. Protecting your income and loved ones makes sense too.
FAQ
1. Do Australians really need personal cover if they have superannuation?
Super funds often include some cover, but it may not be enough. It’s worth checking your balance, beneficiaries, and exclusions to make sure it matches your needs.
2. Is personal cover expensive in Australia?
Costs vary based on age, health, occupation, and cover level. Many people find basic cover more affordable than expected once they compare options.
3. When is the best time to arrange personal cover?
The best time is before major responsibilities, such as a mortgage or children, because premiums are usually cheaper and approval is easier while you’re younger and healthy.
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