Most people know it is important to insure your house and your car.  But what about your income? Your life?

Life & TPD Insurance

When it comes to deciding whether you need life insurance, you need to think about the things you currently pay for and who you support, even in the smallest ways.

What would you be leaving behind?  Also, remember that life insurance isn’t just in the event of your death – it also covers you if you become permanently disabled or suffer a debilitating illness and can no longer work.

Income Protection Insurance

Up until retirement, your most valuable asset is usually your ability to work and produce an income.  If this ability is taken away, through injury, illness or death, there are wide ranging implications for you and your family.

Trauma Insurance

Trauma Insurance provides cover if you are diagnosed with a specified illness or injury.  These policies include the major illnesses or injuries that will make a significant impact on a person’s life, such as cancer or a stroke.

Trauma insurance pays a set amount which can be used for:

• Medical ‘gap’ costs
• An income stream if you stop working
• Ongoing costs of therapy
• Adjustment to housing and lifestyle changes
• Debt repayments

Getting the right mix of these insurances is the trick.  Too much and you are paying more than you need in premiums, too little and you are not covered when you need it most.

Our insurance plans can be customised to cover as much or as little as you require and can be tailored to meet your specific circumstances and your budget.

Basic Cover is Cheap When You are Young

The cost of the premiums for any insurance is linked to the likelihood that you will claim.  While you are young and healthy, the premiums for basic insurance cover are generally quite affordable.

For example, a healthy 30 year old male would pay around $100 per month for $1,000,000 of Life and Disability cover.  This pays out a lump sum of $1 million if you die or are permanently disabled.

Insurance Cover in Superannuation

While basic cover can be cheap, the cost of comprehensive insurance cover might be prohibitive.  Rather than not have enough insurance (or any at all), my preference is to hold some of the cover within your superannuation fund.   That way, you are still protected, but do not have to pay all of the premiums personally.

(As a note, Trauma cover is not available inside super – it can only ever be held in your own name).

It does not matter which super fund you use, they all must offer some form of insurance cover.  Prices can differ a lot between funds though, so it pays to research your options.

The savings come from the fact that some or all of your insurance premiums are funded by your ongoing superannuation contributions, rather than out of your day-to-day budget.

The superannuation fund can claim tax deduction (at 15%) for the Life and TPD premiums payable, something that is not normally available to you personally.  Income protection premiums are tax deductible to both inside super (at 15%) and outside of super (at your marginal tax rate).

To have comprehensive cover may be more expensive, which is where the option of having cover in your superannuation fund can be a good alternative.

There are a number of important things to consider about insurance inside a superannuation fund:

Potential Tax Payable: Life & TPD insurance payouts from a superannuation fund may incur additional taxes, whereas personal insurance payments are always tax-free.  Any additional tax paid will depend upon who receives the death benefits.  If your most likely beneficiary is your spouse (or young children) the payments are most likely to be tax-free.  If the payments are made to adult children, additional taxes can be incurred (at 17.5% on a portion of the total payment).

Disability Cover is limited inside super: TPD cover inside superannuation is limited to a stricter definition of disablement.  TO access this payment inside super, you must be assessed as unable to do ‘ANY’ occupation for which you have training.  TPD outside super can be held as ‘OWN’ occupation, where you must be assessed as being unable to perform your current job.

Issues with Income Protection cover: Income protection cover inside super is limited to a plain vanilla policy (no ancillary benefits).

Where to now?

If you are interested in learning more about how you can get the best (and hopefully cheapest) insurance cover, contact us for a FREE one hour consultation.

We’ll work with you to establish what insurance cover you may need and then come up with a plan to get you that cover at the best price possible.