Warnocks September Newsletter - Personal Insurance Policies
Four of the most important personal insurance policies are Life Cover, Total and Permanent Disability Cover, Trauma Cover, and Income Protection Insurance. These policies provide a robust framework which can help people and their dependents to avoid financial stress and enable them to get on with their lives with some confidence.
There are many online insurance calculators to help you work out how much cover you should have. The following is a rule of thumb to help you to get started to help work out the amount of life cover that you are likely to need:
1. Add up all the cash that your family would have if you were to die;
2. Add to this how much money you have in super, shares and investments, insurance policies, and real estate, excluding your family home;
3. Include the value of any paid leave you have accrued; The total of items 1 to 3 should give you an idea of your total assets.
4. Then, work out your liabilities and ongoing obligations: add up your mortgage and debts, as well as future childcare living expenses, education and other costs.
Yes, in a ground-breaking move, Marcus English at Hewison Private Wealth provides insurance advice, charging ongoing fees for service, rather than commission, and the dreaded trail commissions. This service is becoming popular with our clients, who have been able to make substantial savings on their premiums.
Please note that if you don’t have a will or your will is not up to date, you may unintentionally be making life unnecessarily hard for your loved ones. We encourage our clients to review their wills on a reasonably regular basis, (at least every ten years) and especially after any family major event or trauma.
Disclaimer: The information in this newsletter is provided for informational purposes only and should not be relied upon as specific advice. Warnocks Pty Ltd does not accept any liability in respect of this information.
Life Cover – pays a set amount of money when you die. The payout will go to the persons that you nominate as beneficiaries on your policy, or it can go to your estate if you wish. Payments to your estate will be dealt with according to your will (please see important note below regarding Wills).
There are many online insurance calculators to help you work out how much cover you should have. The following is a rule of thumb to help you to get started to help work out the amount of life cover that you are likely to need:
1. Add up all the cash that your family would have if you were to die;
2. Add to this how much money you have in super, shares and investments, insurance policies, and real estate, excluding your family home;
3. Include the value of any paid leave you have accrued; The total of items 1 to 3 should give you an idea of your total assets.
4. Then, work out your liabilities and ongoing obligations: add up your mortgage and debts, as well as future childcare living expenses, education and other costs.
The difference between your assets and liabilities is the amount of life cover you should buy if you can afford to. Consider also what level of financial support your family could provide to your dependents. (With thanks to ASIC Moneysmart)
Please note that Life insurance premiums, outside of superannuation, are generally not tax deductible; the benefit from a successful claim is tax-free.
Total and Permanent Disability (TPD) Cover - pays a lump sum to assist you with obligations such as rehab, living costs and debt, if you should become totally and permanently disabled. TPD is often bundled with life cover. A bundled policy could reduce any Life payout by a preceding TPD payout, but stand-alone policies are available. Premiums for TPD insurance policies held outside of superannuation are not tax-deductible; a benefit that is paid is generally not taxable, depending on who owns the policy. Policy wording is critical and should be chosen carefully. You could buy cover that pays out in the event that you can’t continue in your own profession or vocation, or you could buy cheaper cover which pays out when you can’t do any job for which you might be reasonably suited by education and training.
Trauma Cover - also known as Critical Illness insurance, Trauma Insurance provides cover if you are diagnosed with a specified illness. These policies include the major illnesses or injuries that will have a significant impact on your life, such as cancer, a heart attack or a stroke. Premiums for trauma benefits are not tax-deductible; lump sum payouts are not taxable.
Income Protection - This very important cover can replace up to 75% of the income that you lose when you are unable to work due to injury or sickness. You can choose the waiting period before the policy pays out, typically between 30 days and 90 days. You can also choose the number of years the policy will cover you for. Income that is received is taxable, and the premiums paid are tax deductible. The length of the waiting period and the number of years of benefit affect the level of premium.
What? No Commission on Premiums, Really?
Yes, in a ground-breaking move, Marcus English at Hewison Private Wealth provides insurance advice, charging ongoing fees for service, rather than commission, and the dreaded trail commissions. This service is becoming popular with our clients, who have been able to make substantial savings on their premiums.
In most cases, Marcus can renegotiate existing policies to be reset on a no-commission basis. Please do speak with either George or Karen if you would like to have a conversation with Marcus, or you can call him directly at Hewison Private Wealth, on 03 8548 4800. Marcus can help you with working out how much of each cover you may need, and the most tax–effective ways to arrange your insurances.
Tip: Don’t have a will, or will not up to date?
Please note that if you don’t have a will or your will is not up to date, you may unintentionally be making life unnecessarily hard for your loved ones. We encourage our clients to review their wills on a reasonably regular basis, (at least every ten years) and especially after any family major event or trauma.
The cost of making a will is not that expensive when compared to the size of most clients’ estate. As well as providing much-needed certainty, a well-drawn will can provide taxation important benefits for minor children and grandchildren. We would be pleased to send you a will pro-forma should you like one. We can assist you with tax-effective Estate Planning to help preserve your family’s wealth. We help you to sort out your Wills, Powers of Attorney, Binding Death Benefit Nominations and other regulatory aspects of your Estate Planning. We can also provide you with Executorship services.
Disclaimer: The information in this newsletter is provided for informational purposes only and should not be relied upon as specific advice. Warnocks Pty Ltd does not accept any liability in respect of this information.