Under-insured Aussies turn to crowdfunding

The failure of people to take out adequate life, income protection and TPD insurance is driving a boom in online crowdfunding websites, according to new research from Integrity Life.

The research found that Australians are stepping in to bail out those without adequate cover: 35 per cent of respondents said they have donated following the death, illness or accident of someone they may or may not know.

In the nationwide poll of 1,000 people, the results showed that more than one in five Australians have donated to a fundraising campaign to help others who are left unable to meet financial outgoings after the death of a loved one, and 24 per cent have made a donation to a family to help with medical and living costs after a serious accident or illness.

Commenting on the research, Integrity Life managing director Chris Powell said crowd fundraising websites are not a contingency plan, nor are they a substitute for adequate insurance.

“They have an important role to play as a last resort for those who are genuinely in need,” he said.

The poll found that fewer than four in 10 Australians (38 per cent) felt that they had enough life insurance to meet costs of a funeral and ongoing living costs if the primary earner passed away, or medical treatment or other costs if the primary earner suffered a permanent disability or illness rendering them unable to work.

“Our research indicates that there are almost 11.5 million Australian adults who know they do not have enough life insurance in place to help them if the primary earner in their household lost the ability to support their family or worse still, their life,” Mr Powell said.

“I expect the real figure would be even higher as people generally underestimate the financial impact of such a devastating event and the long-term effect on their life.”

In the last 10 years, hundreds of fundraising platforms have sprung up around the world. Launched in 2008, GoFundMe is the largest of the social fundraising platforms and is considered to be the leader in memorial fundraising.

An analysis of data by Integrity Life revealed that GoFundMe’s campaigns raise an average of $4,578 for those needing assistance after the death of a loved one. This includes campaigns asking for assistance with funeral expenses as well as meeting ongoing living costs. Medical emergency campaigns appear twice as often, but raise the same amount on average ($4,578).