Archive | Insurance

Is your most valuable asset exposed?

Is your most valuable asset exposed?

Imagine owning an asset that is more valuable than your house, car and other possessions put together. Wouldn’t such an asset be worth insuring?

Remember buying your first car or some other object that excited you? The sense of achievement and the pride of owning something of great value is a feeling that few would forget.

Later on you have the thrill of purchasing your first home, which brings with it a great sense of establishing your own future and providing a foundation for life for you and your family.

Taking on the responsibility of owning major assets like these is usually followed by a strong urge to protect their value by insuring against mishaps, such as loss, fire, storm or other calamitous events. Insurance makes emotional sense through the peace of mind it provides and logical sense through the security it may provide to replace or repair the asset if the worst happens.

But what is your greatest asset?

Physical assets, such as cars, homes and other possessions may amount to substantial value measured in tens or hundreds of thousands of dollars.

However, these may not be your greatest assets. Your greatest asset is arguably the thing that underpins all of your other purchases and assets and, indeed, your very lifestyle. Put simply, your capacity to earn an income.

Consider your lifetime earning potential

To illustrate how your income earning capacity may be your greatest asset, let’s project some simple figures.

Imagine a 20 year old earning $30,000 per year. Even if that person never experienced a pay rise for their entire life, they will have earned $1.35 million by the time they retire at 65.

Scale that up to a 30 year old earning $100,000. With no inflation their lifetime earnings amount to $3.5 million by 65.

There’s a lot at risk

If you had any other asset that was valued at those sorts of figures you would probably not hesitate to insure it, due to the sheer scale of the cost to replace it. The fact that income is not a tangible asset like a house or car, however, means that many people fail to consider it as an asset at all and leave it exposed to risks.

Even though it is not a tangible asset, income is subject to a range of risks that could temporarily or permanently stop it from flowing. An accident could leave you off work for weeks or months, or in some extreme cases could leave you incapacitated permanently. An illness could similarly affect you for an extended period. In the very worst scenario, premature death could occur and leave a dependent family totally exposed to having no income at all.

Income replacement protects your future

To protect against the risks of income loss and the impact it would have on loved ones, an effective solution is to insure one’s income and one’s life. Income protection provides a monthly income stream for temporary or permanent income loss due to illness or accident. Life insurance can provide lump sum cover to replace a lifetime of income. TPD cover can also provide lump sum cover in case you become totally and permanently disabled. Finally, trauma cover can give you lump sum cover if certain serious medical events occur.

Your adviser can tailor a personal insurance package to suit your situation and help secure your family’s future against the loss of a significant asset.

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Buying insurance: Mistakes to avoid

Buying insurance: Mistakes to avoid

Taking out cover can be a difficult and confusing experience given the plethora of products available. Here are some tips on how to avoid common traps and pitfalls.

Whether it’s home, car, health or life insurance, ‘one size doesn’t fit all’. Matching your needs to the right type of cover can be a complex business, so it pays to go in with eyes wide open and seek professional advice.

How do you know how much coverage you need?

Before you begin to compare policy benefits and costs, first make a realistic assessment of how much coverage you need. Underestimating cover is a common mistake that leaves many people in a lot of trouble in the unfortunate event of a claim.

In the case of home insurance, underestimating the right amount of cover to replace your belongings or the building may actually mean that you are unable to claim for the full value of any loss. For example, if your home value is $500,000 and you’re only insured for $250,000 (ie 50% of real value), then your insurer can only pay out a maximum of 50% of the amount you potentially need.

Making a proper assessment is particularly vital when it comes to your personal life and disability insurance, since the amounts of cover required can often be a lot higher than you think and the risks of leaving yourself short can have disastrous consequences on the livelihood and financial security of your family. Some may think that a couple of hundred thousand in life cover sounds like a lot, but if there is a $300,000 mortgage, two kids in school and $3,000 in monthly living expenses involved, then $200,000 could be inadequate if the breadwinner can no longer provide income.

Questions to ask before buying a policy?

Do you really know what you are purchasing when you buy insurance? A few simple questions can be very revealing. You should reconsider buying a policy if the answers to these questions do not satisfy you.

  • What are the exact circumstances that will qualify for a claim?
  • What events are specifically excluded from making a claim?
  • What are the specifics on definitions – for example, on an income protection policy, how is “Total Disability” defined?
  • Is renewability guaranteed, or does the insurer have discretion to arbitrarily withdraw cover at any time?
  • What additional benefits are available apart from the main benefit? To use the example of income protection again – are there additional benefits paid for rehabilitation expenses, hospitalisation, specific injuries or waiver of premiums during claim?
  • Are cover increases offered regularly or are benefits indexed to inflation?

Never shop on price alone

As the list above may suggest, the old adage that ‘you get what you pay for’ is especially true when it comes to insurance. A ‘too good to be true’ price may mean there are limitations and exclusions on cover that may only be discovered when you come to claim. There is a big difference between comparing the cost of a policy and its actual value.

A classic example can be found in the area of income protection where policies often known as “sickness and accident” or “personal accident” may have low premiums, but will have no guarantee of renewability if your health or occupation changes. Beware also of a limitation of perhaps two years on benefit payments and severely restrictive claim definitions.

Professional help removes the worry

When it comes to your personal life and disability insurances, enlisting an adviser to help assess your cover requirements and the relative merits and costs of different policies can be an invaluable advantage. The experience and research capability of a financial adviser can take all the worry out of the process and ensure you achieve the dual goals of maximising quality of cover, while minimising costs.

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Protecting the value of a homemaker

Protecting the value of a homemaker

When it comes to personal insurances and protecting the family unit financially, most of the focus is usually on the value of the breadwinner. A deeper analysis, however, shows that a homemaker’s contribution is sometimes undervalued and consequently left underinsured.

A significant proportion of families still choose to have one partner remain as a full time homemaker. While they may not be generating income, it is important to recognise their value when planning financial security strategies.

Defining the homemaker’s role is the first step

To understand just how valuable a homemaker is in practical, emotional and financial terms, just think of the all the functions that they perform.

Children tend to be a major focus for many homemakers, whether it is driving them to school and other activities, helping with homework, or providing a listening ear and a source of guidance and encouragement.

Beyond the children, the homemaker often fulfils many practical functions in running the home, such as shopping, cleaning, washing, gardening and home maintenance. There is also the need to provide food for the family.

Managing the household budget is also often left to the homemaker and this requires time and attention to ensure bills are paid, banking is done and spending is kept in check.

What if they are not around to do it all?

It is relatively simple to calculate the financial worth of a breadwinner, based on their income earning potential. The impact of a losing homemaker, however, is not quite as easy to quantify in dollars and cents.

The reality is that a homemaker also faces risks of misfortune. Illness may strike at any time, a car accident or fall could cause injury and there is also the possibility of premature death. If such an event occurs then the family could be left with very real and significant challenges in trying to replace what the homemaker was doing.

What would the family do to adjust?

There are different options for how the family can cope with the loss of a homemaker’s contribution. One scenario is for the breadwinner to leave work or work part-time so that they can take on the homemaker’s role. This may be the most desirable option if there are young children involved. Another approach may be to employ hired help, such as a housekeeper.

A combination of both these options may also work, perhaps with the help of family and friends.

Whatever choice is made, it may cost a significant amount of money, either in foregone income or in hiring help, to replace the homemaker.

What can be done?

While homemakers are not eligible to take out income protection, there are other protection options that have the potential to offer substantial financial security.

Trauma insurance can offer a cash lump sum payment that is available on diagnosis of a range of specified major health conditions. Depending on the policy this may include heart attack, stroke and cancer. These funds could be used to allow the breadwinner to reduce working hours, leave work altogether or to pay out debts.

Life insurance may provide lump sum cover in the case of premature death or terminal illness, as defined in the relevant policy and the sum insured can be as much as is needed to give the surviving partner the freedom to make their own choices about how children will be cared for and how the home will be managed.

Total and permanent disability (TPD) insurance can be added to the life cover to provide a similar lump sum of cash in certain specified circumstances if the homemaker suffers an injury or illness that prevents them from ever being able to carry out their role.

If you want to properly quantify and insure the value of the homemaker in your situation, your adviser is ready to help.

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The missing link in financial planning

The missing link in financial planning

Creating an investment portfolio with the potential to build some genuine financial independence can be a stimulating journey, but your personal insurance must be part of your strategy.

The idea of creating financial independence and a comfortable lifestyle through a successful investment portfolio is a compelling one. The missing link in many financial plans, however, is a contingency strategy that will help you protect the lifestyle you have now and the financial freedom you are trying to build for the future. Most importantly, a solid risk strategy is essential for helping to protect the welfare of those closest to you.

The self-completing financial plan

When you start creating a financial plan the fundamental first step is to be clear about your goals. The lifestyle you want to enjoy, the places you want to go and the things you want to own. These goals are what gives your plan direction and motivates you to take the steps to get there.

The fundamental purpose of a risk protection strategy is to make sure that your plan is instantly self-completing if the income that feeds your financial plan is suddenly cut off. In other words, if your ability to fund your investment strategy is taken away by a temporary or permanent illness or injury, then you still have the independent resources to fund your goals using a combination of the right types of personal insurances.

Setting up your risk contingency strategy

In the same way that you set up an investment strategy by defining financial goals and quantifying the money you need to achieve them, your insurance planning also needs to be based goals for the lifestyle you want for you and your family if the worst happens. The home you want to live in, the lifestyle items you want to own, the ongoing income you want to ensure a comfortable life and the experiences you want your family to enjoy.

Once the dollar amounts are identified you can then create an insurance strategy that may include a combination of:

  • life cover that will pay a lump sum on premature death or terminal illness
  • total and permanent disability cover that will pay a lump sum if an injury or illness permanently prevents you from working again
  • trauma insurance that pays a lump sum upon diagnosis of a range of major medical conditions, and
  • income protection that pays an ongoing monthly income for short or long term periods of illness or injury.

Integrating into your financial plan

When setting up a financial plan and deciding on what savings allocations you will be making toward your financial growth, for a lot of people it simply makes good sense to have a proportion of that amount diverted toward funding your insurance strategy. The investment and insurance components will go hand in hand to create an integrated plan that helps ensure your goals are achieved.

Your adviser has the skills and research capabilities to assess your insurance needs and recommend the most effective and economical options to put your plan into practice.

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Life insurance and mental health

Life insurance and mental health

Thanks to concerted public campaigns, the awareness of mental health in our society has increased greatly in the last decade or so. This change is also being reflected in the way life insurers are dealing with the assessment of applicants who have a history of mental health issues.

The personal and financial cost of mental illness in our community is staggering, but fortunately it is now receiving the recognition it deserves. The statistics paint a sobering picture:

  • on average, 1 in 5 women and 1 in 8 men will experience some level of depression*
  • an estimated 45 per cent of people will experience a mental health condition in their lifetime*

Greater awareness and acceptance also means that sufferers are more likely to seek treatment for their condition and the stigma surrounding mental health is gradually dissipating.

Changes in the insurance industry

The positive developments in mental health awareness over the last decade or so have also extended to the way mental illness is treated in the life insurance industry. In days gone by, anyone disclosing a mental health condition on their personal statement was given a wide berth by insurers. The difficulties in assessing and quantifying the risks meant that insurers generally opted to play it safe and decline cover.

These days, there is a much more open attitude toward mental illness and insurers are seeking to underwrite mental illness in the same way as they would for other health conditions. Rather than taking a blanket approach of declining cover based on a history of mental health issues, there is a willingness to treat each case on its merits and insurers are now far more likely to offer cover at standard rates.

Balancing responsibilities

Insurers have a responsibility to both their policyholders and shareholders to ensure that they are careful in what risks they take on. This is essential for the viability of their business. Having said that, it is equally important that they honour the Disability Discrimination Act, which compels them to assess risk without prejudice. This means that if they do decline to take on risk it must be justified by a reasonable and relevant assessment of all information and based on statistical and actuarial data.

Insurers will, therefore, take several factors into consideration, including the seriousness of a person’s mental health condition, its impact on their lifestyle, the success of any treatment, management strategies and any ongoing symptoms. The terms offered by different insurers may still vary depending on each company’s premium rates, product features and underwriting philosophy, but acceptance at standard rates is now quite common. If standard rates cannot be offered, then cover may still be available with increased premiums or with certain medical conditions excluded from cover.

Full disclosure helps ensures reliable cover

The law requires an applicant to disclose all the information that may affect their application for life insurance. It is essential that this is done to avoid issues down the track with claims. If the applicant has complied with full disclosure and the insurer decides to accept the application, the insurer is then bound to honour the insurance regardless of any change in health that may subsequently occur.

Growing mental health awareness

The change in attitude within the insurance industry is one part of the continuing effort to give mental health the attention that it deserves. Thanks to the advocacy of organisations such as Beyond Blue and Mental Health Australia, attitudes and perceptions on mental health are changing for the better. Mental Health Week, which runs from 8th to 15th October this year, also plays a major role in raising the profile of mental health, promoting awareness and equipping people with helpful assistance. For more information visit the National Mental Health Commission.

 

 

* Australian Bureau of Statistics. (2008). National Survey of Mental Health and Wellbeing: Summary of Results, 2007.

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Getting to the heart of the matter

Getting to the heart of the matter

The Heart Foundation has just completed its annual Heart Week event. It’s an opportunity to shine a light on the prevalence of heart disease in the community and what can be done to reduce the risks and achieve a more successful recovery.

Part of the Heart Foundation’s mission is to educate the public and health professionals on what can be done to prevent heart disease and rehabilitate those who suffer from it. As an insurer that is interested in improved health outcomes we want to support this goal by sharing some insights that may helpful to you.

Just how big are the risks?

Cardiovascular disease (CVD) is a major cause of death in Australia, with 43,603 deaths attributed to CVD in Australia in 2013. That’s 30% of all deaths, with one Australian every 12 minutes. It is estimated over 350,000 Australians have had a heart attack at some time in their lives.*

It’s not just men who are affected

While more focus may be given to men when discussing heart disease it is also an issue for women. It may come as a surprise to know that heart disease is the number one killer of Australian women and is four times more likely to be a cause of death than breast cancer.**

The good news is that a lot of these deaths are largely preventable and there is much that we can do to reduce our risks.

What are the causes?

The major risk factors include high blood pressure, high cholesterol, excess weight and obesity, physical inactivity, low fruit and vegetable intake, alcohol and smoking.

Nine in ten adult Australians have at least one risk factor for CVD and one in four have three or more risk factors.

What can you do about it?

Many of these risk factors relate to lifestyle, which means that it is possible to influence your risk of heart disease by adjusting to a healthier lifestyle. This includes:

  • Eating a higher proportion of vegetables, whole grains, fruit, nuts, legumes and fish
  • Making good fat choices, such as olive oil
  • Choosing reduced full fat dairy products and eating less salt
  • Regular physical activity, such as 2.5 to 5 hours of physical activity of moderate intensity per week
  • Do muscle strengthening activities on at least 2 days each week
  • Sit less and walk more.

Be aware of symptoms

Although chest pain or discomfort are common symptoms of a heart attack, this is not universal and the symptoms may present in other areas of the body.

This includes pain, pressure, heaviness or tightness in areas such as the jaw, back, shoulder, neck and arms. The symptoms for men and women can vary and research has found that women are less likely to experience chest pain.

The critical message if you think you may be suffering heart problems is to act early. For more information on warning signs and what to do visit heartfoundation.org.au.

Protect yourself financially

One encouraging feature regarding heart disease is that survival chances are improving. In 2009, 63% of people were surviving heart attack, compared with a 45% survival rate in 1994.***

Many of those who survive go on to recover and have a normal life expectancy. While physical recovery is good news, surviving a heart attack may cause problems financially. A good recovery may depend on adjusting lifestyle, reducing working hours or lowering the stress of debt and expenses. All of these factors may require significant amounts of cash to make them possible.

This is where trauma cover can be so valuable. It can pay a lump sum benefit upon diagnosis that can allow you to make such lifestyle changes. If you want to know more, talk to your adviser about how trauma insurance can help you.

* http://heartfoundation.org.au/about-us/what-we-do/heart-disease-in-australia

** http://www.heartfoundation.org.au/your-heart/womenheart-disease/Pages/default.aspx

*** Australian Institute of Health and Welfare: Trends in Cardiovascular Disease 2012.

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One guarantee you should always insist on

One guarantee you should always insist on

These days the word ‘guarantee’ is often flaunted about frivolously. It’s a mandatory inclusion on T.V. informercials and ‘guaranteed or your money back’ is pervasive on the products we see on our supermarket shelves. When the product in question is a mass produced consumer item, a guarantee is hardly a huge risk for the marketer. In the case of personal insurance, however, it takes on a whole new level of significance.

The two most important words in personal insurance

The diversity in personal insurance products has exploded in the last two or three decades. There are a host of products out there with a bewildering array of added benefits, optional extras, special discounts and increasingly generous definitions. All of that diversity, however, makes very little difference if the policy you are looking at does not contain two critical words; guaranteed renewable.

In essence, when the words guaranteed renewable are included on a life, income protection or disability insurance policy, it means that the insurer is making a binding commitment of enormous proportions. When you consider that the consequence may end up leading to the payment of hundreds of thousands of dollars in lump sum benefits or thousands of dollars a month in income replacement benefits, it is not something that either the insurer or the customer should take lightly.

What does it actually mean?

When a policy includes the words ‘guaranteed renewability’, it effectively means that the insurer is bound to keep the insurance cover in place until the customer chooses to stop it or until the policy expiry (for example, at a pre-determined age), whichever comes first.

If the customer has a change of employment, deterioration in health or takes up a high risk recreational activity after the policy is put in place, it has no effect on the cover. The insurer cannot alter the terms of the insurance cover or cancel the policy as a result of such changes in circumstances. The cover is locked in until the customer chooses otherwise. The only obligation on the customer’s part is that they keep premium payments up to date.

A commitment not taken lightly

Some people may perceive that obtaining life or disability insurance involves an excessive amount of disclosure, with questions about personal health and habits, details of family history and even the need for doctor’s reports or medicals. While this may seem inconvenient at the time, it is important to look at the need for such information in the context of the responsibility and commitment the insurer is taking on.

If they are going to offer cover with a guarantee that they must keep it in place no matter what, then it sheds some new light on why they need to have a full suite of information to assess and underwrite the cover at the outset. Insurers only have one opportunity to get their decision right before they take on an obligation of such magnitude.

Some moderate inconvenience when purchasing life and disability insurance is a small price to pay for the immense security and peace of mind that a comprehensive personal insurance plan can give. Customers who have seen their family’s livelihood and lifestyle preserved through the cash cushion of lump sum or income benefits from their personal insurance would no doubt consider the application and assessment process to be a very small sacrifice indeed.

Don’t be caught with substandard cover

The importance of making sure your personal insurance is guaranteed renewable cannot be overstated. No matter what ‘bells and whistles’ a policy may have, they cannot make up for the fundamental need to have cover that has the inbuilt foundation of guaranteed renewability.

If you have any doubts or concerns about your insurance plans in this regard, then don’t hesitate to contact your financial adviser to review your situation.

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Get savvy to save on life cover

Get savvy to save on life insurance

While most people recognise the value of life insurance, no one likes to pay more than absolutely necessary for cover. Fortunately there are ways that you may be able to reduce net costs without compromising on security.

The possibility of a sudden death or disability striking your family is a financial risk that is too great to ignore. Statistics tell us that:

  • In a ten year period, 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*
  • Overall deaths in Australia between ages of 25 and 64 amount to 25,124**
  • On Australia’s roads alone there were 1,156 deaths in 2014***

Simply hoping that “it won’t happen to me” is not really a valid option, when your family’s comfort and security is at stake, but for some there is the challenge to fit the cost of insurance into their budget. The good news is that there may be ways to reduce net cost, using strategies that creatively take advantage of legitimate tax saving opportunities.

How Steve and Georgia lowered the net cost of their life cover

Steve and Georgia and their two young children were a single income family, with Steve earning around $100,000 as a sales manager, while Georgia chose to stay at home to care for the two children.

Conscious of wanting to ensure future security, they arranged their life and disability cover with the help of their adviser. During their discussions the adviser also explained how careful arrangement of their cover ownership could reduce the net cost of cover.

Their cover package included life, TPD, income protection and trauma cover. The adviser suggested that by moving the ownership of the life and TPD components under Steve’s superannuation fund they could achieve substantial tax savings. The trauma cover and income protection cover would remain under personal ownership.

How the Life and TPD tax saving was achieved

The tax savings were achieved by Steve arranging with his employer to salary sacrifice the $1,800 life and TPD insurance premium. This simply involves diverting $1,800 of his pre-tax income into his super, thereby avoiding income tax on that amount. With a 39% marginal tax rate, (including Medicare levy), this resulted in a tax saving of $702.

Without this strategy the $1,800 premium would need to be paid from after-tax income, which at Steve’s tax rate would require $2,950 of gross income – a difference of $1,150.

To achieve further savings, they were also able to increase the amount of salary sacrifice into Steve’s super to then transfer into a super account in Georgia’s name to cover her life and TPD premium as well. Such savings could occur every year and could enable the money saved to go toward their lifestyle or perhaps be diverted into their wealth accumulation plans.

Get savvy on life insurance - savings table

The value of seeking advice

This is just one example of how an adviser can help to increase the efficiency of your financial plan to help you achieve your goals and advance your financial security and growth. While this particular strategy may not be suitable for everyone, it does illustrate how clever use of the available rules can garner substantial savings.

* The Lifewise / NATSEM Underinsurance Report 2010

** Source: ABS, Deaths, Australia, 2013

*** Road Deaths Australia 2014 Statistical Summary, Bureau of Infrastructure, Transport and Regional Economics

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Ensuring financial freedom if major disability strikes

Ensuring financial freedom if major disability strikes

Believe it or not, premature death may not be the worst that can happen to your family financially. A permanent medical condition that stops you from ever earning income again can result in even greater financial challenges. Fortunately, there is an answer.

Most people have at least a rough idea of the financial impact that the death of a breadwinner may cause. Mortgage, living expenses and education costs have to be provided for. Similarly, many are conscious of the need to replace income if they take extended time off work due to an operation or an unexpected illness.

But what if something more permanent happens? Something that prevents you from ever earning income again, but leaves you with a relatively normal life expectancy.

Such a condition may actually cause even greater financial burdens than death, because of the additional expenses related to the sickness or injury that are on top of the debt and income needs that you need to provide for.

Injuries such as paraplegia or a major head trauma, or sicknesses such as cancer or depression, can result in permanent disability and permanent income loss and can incur surprisingly high additional costs for treatment and adapting of your lifestyle and living situation.

Let’s take a closer look at what this might entail and what you can do about it.

Getting the basics taken care of

The first priority is to relieve yourself of the financial worry of a mortgage and other debts and provide an ongoing income to cover basic living costs that you and your family need for at least a reasonably comfortable lifestyle.

Medical treatment

Many medical conditions require a range of ongoing tests to be carried out well into the future. Operations may be required and medications can also be a significant extra cost. Then there may a desire to pursue alternative therapies or more advanced treatment options in other countries, which are beyond the scope of health insurance alone.

Adapting your home to your needs

Your lifestyle may benefit from renovations and specialised provisions around the home to make life more comfortable and convenient. This can include ramps, bathroom and kitchen customisation and door widening – all of which can incur substantial costs.

Gear and gadgets

Specialised gear, such as wheelchairs, lifting machinery, exercise equipment and automation of doors and appliances, can make life a whole lot more liveable for certain medical conditions. There may also be an opportunity for medical equipment to be brought into the home, instead of relying on external services and institutions.

Rehabilitation expenses

Physiotherapy, occupational therapy and other specialised assistance for rehabilitation can be an ongoing and necessary aspect of living with disability and can improve quality of life.

In-home assistance

You may wish to (or need to) employ in-home nursing care and other domestic help around the home to relieve stress on family.

Transport costs

Specialised transport may be needed to ensure you have as much freedom of movement as you want.

The best way to fund these costs

The staggering costs that these factors can incur are generally not covered by health insurance or Medicare and cannot be funded out of your income protection. Life insurance is designed to pay in the event of death or terminal illness, so it is of no use if your life expectancy is still relatively normal and advancements in modern medicine are improving survival rates all the time.

The best solution to funding these costs is with purpose built insurance that pays a lump sum benefit, which you are free to spend as you please. That is exactly what total and permanent disability insurance is. It gives you the freedom and independence to make the most of life, no matter what the circumstances.

Plan your risk protection professionally

Your adviser can show you how a comprehensive total and permanent disability plan can fit into your risk protection strategy in the most economical way, so don’t hesitate to discuss your concerns.

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What is trauma insurance and why should I have it?

What is trauma insurance and why should I have it?

A serious illness can make it difficult or impossible for you to continue to work. If something were to go wrong and you weren’t able to work for an extended period of time, you would probably need to find a way to support yourself and your family financially. Trauma cover can provide a financial safety net for such events.

Trauma insurance is a type of life insurance that pays a lump-sum payment in the event that you are diagnosed with a specified illness including things like cancer, heart attack, stroke etc. Trauma insurance is designed to give you money when you need it most to cover things like:

  • Any private medical costs above your health insurance
  • An income stream if you stop working (This can be provided for through income protection but generally only up to 75% of your income)
  • The ongoing cost of any therapy and special transport costs
  • Adjustments to housing and lifestyle changes
  • Debt repayments

It is the most expensive life insurance product, however it is also the one that is most claimed upon!  If you were to suffer from cancer and were to be off work for a couple of years due to treatment your life insurance would not pay out and your TPD insurance would not pay out because you will return to work one day. However, your trauma insurance would give you that lump sum payment to ease the financial pressures of not working.

Collins Financial Group can assist with personal life insurance to protect your income in the event of death, injury or illness.  To find out whether you have appropriate and accurate cover, why not schedule a meeting with Troy now?

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Living insurance for real lifestyle choices

Living insurance for real lifestyle choices

Personal insurances such as life and total and permanent disability are usually associated with protecting us from those worst case scenarios, such as the death of a loved one. Improvements in survival rates from major illness, are now prompting many to consider the need for ‘living insurance’ offered by trauma cover.

Advances in modern medicine and a greater awareness of healthy lifestyles have seen an ongoing improvement in survival rates from ‘modern day’ illnesses, such as heart disease, cancer and stroke:

  • Of the new cancer diagnoses in the period 2006–10, the chances of surviving for at least 5 years was a surprising 65% for males and 67% for females*.
  • In 2009 63% of people who had a heart attack survived, compared with a 45% survival rate in 1994**.
  • The death rate due to stroke in 1987 was 73.5 per 100,000, but by 2009 the rate more than halved to 32.8 per 100,0002.

Many people who have survived such conditions will go on to lead a normal healthy life with lifestyle adjustments.

What would you want to do after surviving a major illness?

While survival rates are encouraging, it also underlines the need for a greater focus in our financial planning for what life will be like on the other side of a major health scare. If it happened to you, how would you want to change your lifestyle and how could you afford to do it?

Trauma insurance is tailor-made for this situation. Unlike any other form of personal insurance, it pays a lump sum cash amount upon diagnosis of heart attack, stroke, cancer and a host of other major medical conditions. You are free to use it for any purpose you choose, to help recover from the condition and to make major adjustments to your lifestyle.

A lump sum cash benefit to use as you choose

For some, trauma insurance will allow the funding of specialised medical treatment that is beyond the scope of their health insurance and which they otherwise could not afford. For others, it will give them the power to de-stress their lives by paying out major debts, such as a mortgage.

Then, there are those who want to use the funds to change their work situation, such as a move to part time employment, so they can enjoy increased leisure time.

Still others may want to use their cash lump sum to pay for an extended vacation for themselves and their families.

It truly is ‘living insurance’ that can help you transform your life and turn a negative situation into a positive one.

Trauma insurance in action

Geoff is a 45 year old sales manager who is married with 2 children and a mortgage of $150,000. Geoff owned life insurance and income protection, but after a needs analysis his adviser also helped him implement trauma cover of $300,000.

A year later, Geoff was diagnosed with bowel cancer. After surgery followed by a five month period of treatment and recuperation, he was given the all clear and was declared fit to return to work. His income protection paid him 75% of his monthly income during this time, but ceased once he was given the OK to return to work.

With his trauma cover, however, Geoff was also able to:

  • Pay out the $150,000 mortgage
  • Use $75,000 to fund an extra six months leave without pay from his job
  • Take his family on a $25,000 overseas vacation
  • Invest the remaining $50,000 to provide some ongoing ‘lifestyle income’ to enjoy with his family.

Enjoy the best of life, whatever the circumstances

Trauma cover is real lifestyle insurance that lets you control your future with confidence and independence if a major condition strikes.

Talk to your adviser if you want to explore what it can do for you.

 

* Australian Institute of Health and Welfare Website: www.aihw.gov.au/cancer/cancer-in-australia

** Australian Institute of Health and Welfare: Trends in Cardiovascular Disease 2012

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Equip yourself to care for your kids

Equip yourself to care for your kids

As parents we don’t think twice about doing all we can for our children, but many of us may have a gap in our financial planning that could prevent us from giving them the best possible care.

Protecting and caring for our kids is perhaps the highest of all priorities. We work hard to give them a comfortable lifestyle, a good education and everything they need to grow up happy and healthy. It is when our kids become unwell that our instincts to nurture and care are at their most intense. The thought of a child suffering from an illness or injury will cause us to drop everything and give them our full attention.

Giving them the best care

We are all familiar with everyday ailments, such as coughs and colds or a mishap on the bike. In those cases, a bit of TLC or perhaps a day or two off school will normally be sufficient, but what if something more serious happens?

If they suffer a major illness or injury, your child will look to you for comfort and will depend upon you to give them the best possible care. Of course, there will be no limit to your desire to get them well again, but there may be situations where your ability to care is compromised by financial limitations.

What will it cost?

As much as we don’t want to think about it, the reality is that there will always be a risk of a child suffering a major illness or injury. While medical costs may be partly covered by Medicare or health insurance, this will only be part of the total costs involved in giving them the best care.

Depending on the nature and severity of the illness, you may want to take time off work or even leave work altogether in order to devote yourself to their recovery. What if specialised medical treatment is required? It could be far from home or for an extended period, which results in travel and accommodation costs for you to be near them.

In the recovery process, you may also want the financial ability to provide those extras, such as special holidays or home entertainment items that can make life more enjoyable for them.

Covering the cost of such expenses will often be well outside your resources and this may restrict what you are able to do; a situation that no parent ever wants to be caught in.

Funds that free you to help them recover

Fortunately, there are ways to build in financial protection that will help address this problem. Many personal insurance plans offer the option to add children to the policy, so that lump sum cash payments can be made if the child suffers a specified major traumatic illness or injury. In the very worst scenarios, some of these policies can even make special payments if terminal illness or death eventuates.

While initially it may seem distasteful for a financial benefit to emerge from a child’s misfortune, but the reality is that such protection will ease financial pressures, minimise your anxiety and create the freedom for you to focus your time, care and attention on their recovery. You will be enabled to give them your very best when they need you the most.

An insurance claim benefit could fund your ability to take extended leave from work. It could enable you to employ home help to look after ongoing household tasks while you focus on what’s really important. It could save you from the overwhelming cost of seeking the best treatment for your child.

Children’s cover is a simple solution to a problem that many simply don’t realise exists.

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