Australia’s preference: Insure car but not Income?

 

“83% of Australian’s insure their cars but only 28% insure their income.” *lifewise.org.au
Which is the most important asset to you?

 

It seems far from ideal that in the tragic event of a car accident that your car is more protected than yourself.
Take for example a 35 year old man, Joe. He earns $60,000 per annum and has a car worth $20,000. Over the next 20 years, if Joe’s salary stays at $60,000, he will earn approximately $1.2 million dollars over that period, not taking into account any pay rises.

 

Does it come as a surprise that Joe insures his car worth $20,000 to him, yet he does not insure his ability to earn which over the next 20 years is worth $1.2 million to him? It should. It is also surprising that Joe is not alone.

 

An unexpected illness, broken leg on the sports field or a severe back injury could put you out of action for months. This leaves a number of uninsured Australian’s struggling to meet the everyday costs of food, rent, and utilities, not to mention if you have a mortgage, kids, or personal debt. What would you do without an income?
Income Protection costs a fraction of your income yet can provide you with a replacement monthly income stream should you suffer an injury or illness rendering you unable to work. It can provide you with the peace of mind that an injury or illness won’t stop you from receiving a smooth monthly income.

 

Talk to one of our advisers today about putting in place a plan to cater for your personal needs. Take control of your income, don’t leave it up to chance.

 

The information provided in this document, including any tax information, is general information only and does not constitute personal advice. It has been prepared without taking into account any of your individual objectives, financial situation or needs. Before acting on this information you should consider its appropriateness, having regard to your own objectives, financial situation and needs. You should read the relevant Product Disclosure Statements and seek personal advice from a qualified financial adviser. From time to time we may send you informative updates and details of the range of services we can provide. If you no longer want to receive this information please contact our office to opt out.

Reaching 100 years old: some tips from Sweden

The key ingredients are simple according to Researchers at the University of Gothenburg, Sweden. “Refrain from smoking, maintain healthy cholesterol levels and confine themselves to four cups of coffee a day” says Dr Lars Wilhelmsen.

 

The study analysed data on 855 Swedish men born in 1913, including 10 who are over the age of 100. The scientists were able to identify factors that promoted longevity of life, particularly after the age of 55.

 

The study also showed that it also helps to own a house by the age of 50 — indicating a high standard of living — display a good level of middle-age fitness and to have a mother who lived a long time.

 

The research found that 27 per cent of the study participants survived to the age of 80 and 13 per cent to 90.

 

Of all the deaths occurring after the age of 80, 42 per cent were attributed to heart disease, 20 per cent to infection, 8 per cent to stroke, eight per cent to cancer, six per cent to pneumonia, and 16 per cent to other causes.

 

You can find the complete findings in the Scandinavian Cardiovascular Journal.

Do you need financial advice?

Why financial advice?

The financial decisions that people make at different turning points in their life can have immediate and life-long consequences.
Good advice should provide the information you need to make the right decisions – decisions that suit your circumstances and your aspirations. Insuring the ‘keyperson’ within your environment allows you continue with your aspirations should the unexpected occur.

 

What makes good advice?

Good advice helps you make the most of the assets you have, continue building those assets, and achieve financial security and peace of mind.
Good Advice puts your needs first, helping you better understand your financial situation and considers alternatives while providing solutions and strategies that suit your needs; In short, financial advice helps you make better informed decisions while providing you with security and peace of mind.

If you are in doubt with regards to your requirements or if you would like to review your existing life insurance, please feel free to call me on 1300 78 55 77.

SMSF Funds Lack Important Protection

‘SMSFAdvisor’ recently highlighted a study carried out within the insurance industry which revealed that the majority of SMSF trustees are underinsured when it comes to life insurance – possibly without even realising it. It went on to explain how only 13% of those partaking in the study actually had life insurance with many believing they did not need it or were ignorant to the fact their SMSF did not provide for them.

Life insurance is often misunderstood when it comes to knowing how much is required. It does not need to be complicated but it does need to be considered.

If you are in doubt with regards to your requirements or if you would like to review your existing life insurance, please feel free to call me on 1300 78 55 77.

Original article released by www.smsfadvisoronline.com.au on 6/06/2013

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 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

Why insurance is critical when SMSFs borrow to buy property

Many SMSFs that have used a Limited Recourse Borrowing Arrangement (LRBA) to acquire a property have little or no other assets in the fund. So when a member is disabled or dies, there is often not enough liquidity to pay a death or disability benefit and pay out the debt. To further complicate matters: It’s often not possible to pay death or disability benefits as an in specie transfer when the LRBA is still in place; only a limited range of beneficiaries are eligible to receive a death benefit as a pension; and if there are beneficiaries who are available and willing to receive a death benefit pension, the fund would still need enough liquidity to make the pension payments, as well as meet the loan interest. For more information, call David Reed on 8539 7233

Source: Damian Revell, SMSF Weekly 27/8/12

Review your life insurance today

No matter what stage your business is at, it is most important to review your life insurance policies to make certain you have sufficient coverage for your business needs.  Just as you would increase the insurance on your home if you were to make improvements to it, so too should you amend the insurance on your business if it has changed.

Life insurance is intended to preserve and protect your intentions for your business and for your survivors. It’s critical that it reflects where your business is currently at!

Please contact our office on 1300 78 55 77, or email your details to admin@keyperson.com.au for a no obligation assessment.

Life Insurance: 1 in 5 parents will die early or be too sick to work

Life insurance: One in five parents will die early, or be too sick to work
One in five parents will become too sick or injured to work, or will die before retirement age, according to a disturbing report released during 2010.

 

The Lifewise/NATSEM Underinsurance Report states that 18 Australian families lose a working age parent every day, which translates into nearly 7000 families each year devastated by a loss of a parent. (Trish Power (21/2/2011))

Australians don’t have enough life insurance

Australians don’t have enough life insurance

According to the Lifewise report, 95% of families do not have adequate levels of insurance.

 

The ‘big picture’ finding from the report was that due to underinsurance by most Australians, if a parent becomes ill or dies, then such an event, and many events like this one will cost the government $1.3 billion in additional social security payments.

 

The study measured the impact of four scenarios on a typical family. A ‘typical’ family involved a couple with two children under five, and the main income-earner worked full-time earning $75,000 and the secondary-income earner worked part-time earning $35,000. They have a mortgage. The report assumes that the male parent has $30,000 in super, $91,000 in life insurance cover, and total and permanent disability insurance of $71,000. The female parent has $14,000 in super.

 

The four scenarios measured in the report were:

  • Husband dies
  • Husband disabled and temporarily unable to work, or permanently unable to work
  • Wife dies
  • Wife disabled and temporarily unable to work, or permanently unable to work.

 

According to the report, the typical family would lose half or more of their income as a result of the death of a parent, or the serious injury or illness of a parent. Other findings from the report included:

  • Based on current average levels of insurance, the typical Australian family’s weekly income will be cut by half to about $600 (after paying for childcare and mortgage) where the main income-earner (husband) becomes temporarily ill or injured and can’t work, or where secondary income-earner (wife) dies or becomes temporarily or permanently disabled
  • The changes to the family’s financial situation will be devastating, and will last at least 10 years.

 

(Trish Power, 21 Feb 2012)