Total & Permanent Disablement Tax Deduciton Portions

Total & Permanent Disablement Tax Deduction Portions

Changes were recommended to the Income Tax Assessment Amendment Regulations which related to the deductible portion of premiums for TPD insurance, and were passed on 5 October 2011.

These changes limit the deductible portion of TPD insurance premiums and give superannuation funds the option of using a simpler method to determine this portion, without having to engage an actuary.

Key changes from the draft Regulations include:

1. Clarification that deductibility is not affected if terminal illness is included into the insurance policy;

2. The inclusion of domestic (home) duties definition; and

3. The tightening of the definitions of TPD own occupation and TPD any occupation.

Importantly, there were no changes to the specified deductible portions of eligible TPD definitions, as follows:

Insurance Policy

Specified Deductible Proportion %

TPD Any Occupation*

100%

TPD Own Occupation*

67%

TPD Own Occupation bundled with Death (Life Cover)*

80%

*(Including with one or more of the following inclusions: ADL, cognitive loss, loss of limbs and domestic (home) duties)

(Article courtesy of AIA Insurance, 19 April 2012)

The Importance of Trauma & Income Protection Insurance

How would your family manage when faced with a traumatic event ?

When faced with a traumatic event, families need to cope emotionally, you may also need to make changes to your living arrangements and you may also be facing loss of income. The last thing you need to worry about at such a stressful time is finance.

Trauma insurance can provide peace of mind by ensuring you have sufficient money to fund changes in living arrangments, providing an income while you are off work & therefore creating less stress for your family at a difficult time.

Traumatic events are more common than you may think.

Take a look at the igures below :

Work Related Statistics (trauma and income protection)
• 2 of 3 males, 1 of 3 females, or 1 of 2 Australians will suffer a traumatic event during their working life
• 50% of all trauma policies sold are to “white collar” workers
• Most trauma claims occur within 2.5 years of policy commencement
• A person is 3 times more likely to suffer trauma than death before age 65
• There are approximately 117,000 Australians who are “permanently unable to work” due to illness or injury
• 1 in 3 Australians will be off work for more than 3 months during their working life due to illness or injury
• When a person is off work for more than 3 months, then the average duration of claim is usually 4.2 years!
• The most common type of work related injury is industrial deafness, followed closely by back related injuries
• Each year, approximately 1 million Australians experience serious injuries or illness, which either require hospitalisation or prevent them from working
• Half of all serious accidents occur away from work, so workers are not covered by workers compensation
• 20,000 Australian children (minors) are primary care givers for at least one parent due the parent’s sickness or disability
• 1 in 2 Australians will be off work for more than 7 days during their working life due to illness or injury
• Less than 1 in 5 Australians have income protection cover with a benefit period of greater than 2 years (Yes, this includes company sponsored plans!)
• Nearly 10% of Australian full-time workers leave work due to chronic illness
Source: “Year Book Australia 2002 – Health – Special Article – Chronic diseases and risk factors”. by Australian Bureau of Statistics

The Importance of Life Insurance for Key Personnel

Many business owners don’t hesitate to insure physical assets such as motor vehicles, plant and equipment. However they often overlook the importance of insuring themselves (and other key people in the business) in the event of death, disability, illness or injury.

This can be a very risky oversight, as the long term absence or loss of a key person can have a dramatic impact on your clients business.

Our strategy guide can help explain to your client how insurance can provide an injection of cash to:
•protect personal and business assets
•offset a reduction in business revenue
•fund an orderly transfer of business ownership, and
•meet a range of other objectives.

To find out which strategies suit your clients needs and circumstances please call Veronia on 1300 78 55 77