Personal Insurance
Your Duty of Disclosure
Why you need life insurance
The day you’ve been waiting for has arrived; your brand new car is ready to take home. The first thing you do before driving it is get it insured. There’s no way you would risk anything happening to your new car!
This is a common scenario. Most of us don’t think twice about insuring our possessions, but what about protecting the most important asset – you? If you were in an accident and couldn’t work, how would you and your family afford your medical bills, on top of your mortgage and daily expenses?
While no-one expects to encounter misadventure, being prepared for adversity can help you protect against financial hardship. Insurance is an important part of any financial plan. In fact, wealth protection is often easier and cheaper than wealth creation. A comprehensive financial plan is as much about protecting wealth as it is growing it.
Life insurance is one of the best ways of protecting what’s most important to you. However understanding it all can be time consuming and complicated. Let’s simplify things and look at the basics.
The underinsurance epidemic
One of the biggest security threats facing Australians is the underinsurance epidemic. The majority of Australians simply don’t have sufficient cover. Even more alarming, many lack any cover at all. Consider the statistics1:
- One in five families will be impacted by the death of a parent, a serious accident or illness that renders a parent unable to work;
- The typical Australian family will lose half or more of their income following a serious illness, injury or the loss of one of parent as a result of underinsurance;
- 95% of families do not have adequate levels of insurance; and Underinsurance is expected to cost the federal government $1.3 billion over the next 10 years.
These are sobering statistics, but the good news is that underinsurance can be overcome. I can help work out your insurance needs and how to structure premiums cost effectively.
| Insurance | Description | Suitable for | Also known as |
|---|---|---|---|
| Death of the insured individual |
Pays a lump sum benefit on death or terminal illness Can be used to eliminate debt and help with your family’s ongoing living expenses. |
People with dependants or debts People who don’t earn an income but contribute to the running of the household e.g. nonworking spouse. |
Term life cover Death cover Life Cover |
| Total and permanent disablement (TPD) | Pays a lump sum if you suffer a permanent disability (according to policy definitions) that prevents you from working |
People with dependants People with mortgages or other significant financial liabilities. |
TPD cover. |
| Suffering a trauma condition |
Pays a lump sum upon diagnosis or a specified injury or illness. Cover is specific to a range of injuries and ailments such as heart attack, stroke, cancer (according to policy definitions |
People with families or financial dependants, especially People who don’t earn an income but contribute to the running of the household e.g. non-working spouse. |
Trauma cover Critical illness cover. |
| Protecting your income |
Replaces up to 75% of your gross annual income as a monthly payment if you are unable to work due to illness or injury. You can nominate when payments begin. Premiums are generally tax-deductible |
Families with dependants Working singles Self-employed |
Income protection. |
Explaining life cover
Life cover is also known as term life insurance or death cover. Life cover provides peace of mind by paying a specified amount to your beneficiaries, ensuring they are looked after in the event of your death. A lump sum or equivalent installments can be paid to the policy owner, nominated beneficiaries or to your estate.
You can also add TPD cover to your life cover policy in case you are unable to work due to a permanent disability. You may also add trauma cover which pays a benefit if you are diagnosed with one of a number of conditions such as cancer, heart attack or stroke.
Why you may need life cover
Life cover becomes a necessity if you have dependents who rely on you financially or if you have debts which need to be extinguished upon your death. Immediate expenses to take into account include:
- ongoing income for your dependents mortgage or other debts
- funeral costs
- medical or hospital costs
Explaining TPD insurance
TPD insurance provides a lump sum payment or equivalent instalments if you become permanently disabled, as denied in the policy. Generally, a permanent disability means you can’t work in your current occupation or a job you have trained or studied for, or previously worked in. It’s important to read the fine print because various definitions apply to TPD insurance. I can help you decide what options are best for you.
Why you may need TPD insurance
If you were unable to work, how would you maintain your family’s lifestyle? How would you pay for the ongoing medical expenses associated with serious illnesses and injuries? Most Australians simply don’t have enough savings to protect their lifestyle if they suffered a permanent disability.
TPD insurance can provide you with a lump sum of money to help eliminate debt, pay for treatment and maintain your lifestyle while you focus on adjusting to what may be a very different lifestyle. It’s especially relevant for people with dependants and for people with mortgages and other significant debts which they couldn’t pay with savings alone.
Explaining Trauma / critical illness insurance
Trauma insurance provides a lump sum benefit or equivalent installments if you’re diagnosed with a specific illness or injury covered by the policy (such as cancer, stroke, blindness, severe burns, loss of speech or deafness). The benefit amount, chosen by you, can be used to reduce debts, pay for medical expenses and maintain your lifestyle while you recover.
Why you may need trauma insurance
Trauma insurance is especially pertinent for families or those with dependents and or debts. Consider the consequences if one half of a couple became seriously ill and was unable to work. How would they cope with the mortgage and everyday expenses on top of medical costs for treatment and rehabilitation? Trauma insurance provides funds for everyday living expenses and treatment costs. It may even allow you to make permanent lifestyle changes like returning to work part-time.
Child Cover
There is a real and natural fear among parents that their children may suffer from a serious illness during their
childhood. But when this actually happens it is not only a devastating event for the family from an emotional viewpoint, it can be just as devastating for the family’s financial security. The compromises which are felt necessary, such as taking time off work to be with the sick child through treatment etc, cannot easily be afforded by most families. The amounts of trauma insurance recommended will allow some choice at a critical time, so that time off without pay or a break from self-employment can be arranged with minimal impact on finances in the short term.
Child Cover pays a lump sum if your child dies or suffers a specified trauma condition, including cancer, brain damage and severe burns. This money can help cover medical expenses, rehabilitation, and transport and accommodation costs if treatment is not available locally. It could also enable you to take time off work to look after a sick or injured child. The amount insured can range from $10,000 to $150,000.
Explaining income protection
As the name suggests, income protection is the best way to protect your current income if you are unable to work due to illness or injury. This type of policy pays up to 75% of your gross annual income, in monthly benefits, to cover your living expenses. Income protection has waiting and benefit periods, as described below.
The waiting period is the number of days before the income benefits start. It can be 14, 30, 60, 90, 180 days, or even 1 or 2 years after the claim occurrence. For example, if you have sufficient savings to last 90 days, you may choose cover starting after 90 days.
The benefit period is the period of time you will receive benefits whilst unable to work due to illness or injury. You can select from a range of benefit periods, such as two, five, six years, or up to age 55, 60, 65 or 70 depending you occupation. Naturally, the premium costs vary depending on which of these options you choose.
Some of the above options can be restricted to certain occupations. I can assist with what options are available to you.
Why you may need income protection
While we readily consider protecting our possessions, we often neglect to protect our ability to earn an income. Income protection is important if you have: debts, such as a mortgage, credit cards, or personal loans you couldn’t pay if you were unable to work due to sickness or injury little or no savings the need for regular income to pay ongoing family expenses such as food, household bills, rates, school fees or running a car your own business, or own it with partners and have ongoing business costs and expenses a family and want to know they are financially protected if you were unable to work.
To ensure you correctly identify how much insurance you have and how much you need, you should seek advice from your adviser. They will be able to look at your overall financial situation and help you make the right personal insurance decision.
Explaining buy/sell & keyperson insurance Business Insurance Solutions
No matter how successful your business is, you should be asking yourself the following questions:
What would happen to your business or family assets if you were to die or become permanently disabled?
How would you meet your business expenses if you suddenly couldn’t work?
If you died, would your business partners be able to pay out your family for your share of the business?
Would your estate be liable for your business guarantees if you were to die or become permanently disabled?
What would happen to your family if you were too ill or injured to bring home an income?
I can advise you on a range of insurances and insurers to make sure that you, your business and your family are adequately covered. With our range of insurers, you can rest assured that you’re getting a wide choice of insurance solutions at competitive rates.
Business Buy Sell
Business succession planning ensures that the surviving partner or shareholders in a business can purchase your share of the business from your estate in a predetermined and equitable manner.
Key Person Insurance
Protects the business in the event of a key person being unable to work and the possible loss of revenue, or capital costs.