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Life insurance isn’t just about financial security—it’s about peace of mind. Here are some key reasons to consider it:
If your loved ones depend on your income, life insurance can replace that financial support. This is particularly crucial for families with young children, spouses, or adult dependents who might struggle to maintain their standard of living without you.
Even if you don’t have significant assets, life insurance allows you to create an inheritance for your dependents. With the help of financial experts, you can leave behind a financial legacy.
Life insurance can cover more than just daily expenses. It can also help pay off significant debts like mortgages, car loans, and credit card balances. Additionally, it can ease the burden of funeral costs, which can range from $4,000 to $14,000.
While no amount of money can replace a loved one, life insurance offers reassurance. Knowing your family will be taken care of financially can provide a sense of security during uncertain times.
Life insurance isn’t a one-size-fits-all solution. Different policies cater to different needs:
Life insurance becomes essential at various stages of life, particularly when you take on responsibilities or financial obligations. Consider getting life insurance when:
Even if you don’t yet have dependents, getting life insurance early can save money. Premiums are often lower when you’re younger and healthier, as most insurers require a medical check to determine your rates.
The amount of life insurance you need varies depending on your financial situation and life stage. Here’s how to calculate it:
Keep in mind that your insurance needs will change over time. For example, a 22-year-old with no dependents may only need enough to cover funeral expenses, while a parent with a mortgage and young children will require much more. As your children grow, your debts decrease, and your superannuation builds up, you may need less coverage.
Life insurance is more than a financial product—it’s a safety net for your loved ones and a way to plan for the unexpected. Whether you’re just starting out or reassessing your needs, understanding your options and getting the right coverage is crucial.
If you’re unsure where to start, consult with a life insurance provider, broker, or financial adviser. They can help you navigate the complexities and tailor a policy that suits your needs and budget.
To learn more about financial security, speak to our qualified team of financial planners and wealth creation experts. Contact us online or call us on 03 9427 0855.
Source: NAB
Reproduced with permission of National Australia Bank (‘NAB’). This article was originally published at https://www.nab.com.au/personal/life-moments/family/life-insurance
National Australia Bank Limited. ABN 12 004 044 937 AFSL and Australian Credit Licence 230686. The information contained in this article is intended to be of a general nature only. Any advice contained in this article has been prepared without taking into account your objectives, financial situation or needs. Before acting on any advice on this website, NAB recommends that you consider whether it is appropriate for your circumstances.
© 2022 National Australia Bank Limited (“NAB”). All rights reserved.
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Any information provided by the author detailed above is separate and external to our business and our Licensee. Neither our business nor our Licensee takes any responsibility for any action or any service provided by the author. Any links have been provided with permission for information purposes only and will take you to external websites, which are not connected to our company in any way. Note: Our company does not endorse and is not responsible for the accuracy of the contents/information contained within the linked site(s) accessible from this page.
With income protection insurance, you can be paid some 70 per cent of your income for a specified period to help when you cannot work.i
The most common claims are for illnesses such as cancer, heart attack, anxiety and depression.ii Payments generally last from two to five years although you can take a policy up to a certain age, such as 65, and the amount is generally based on 70 per cent of your income in the 12 months prior to the injury or illness.iii
For some, income protection insurance may be part and parcel of your superannuation although more commonly this is limited to life insurance, and total and permanent disability cover. But, if you do have income protection insurance in your super, check the extent of the automatic cover as it can be modest.
Alternatively, you could take out a policy outside super where you will enjoy tax deductibility on the premiums. Income protection insurance is the only insurance that is tax deductible. Other life insurance products outside super such as trauma insurance are not tax deductible.iv
There are many considerations when looking at income protection insurance and the best place to start is to work out your budget, thinking about how much would you need to maintain your family’s lifestyle if you are unable to work. Then you are able to decide on the appropriate level of income protection insurance as well as other factors that affect premiums such as how quickly you might need the payments to start and how long these payments will last.
Many people think income protection insurance is expensive, but you can fine tune policies to suit your budget by changing the percentage payment amount, the length of time for which you would receive the payment and how soon you start getting a payment once you cannot work. Reducing these parameters can reduce your premiums.
It is important to be mindful of a number of factors that might affect the success of any claim you might make. So, make sure you read the product disclosure statement.
Every insurer has a different definition as to what will trigger a payment, so you need to understand the difference between “own occupation” and “any occupation” for cover. For example, if you are a surgeon and lose capacity in one of your hands, you will receive a payout from your insurer if you have specified “own” occupation because you can no longer work as a surgeon. But if you opt for “any” occupation, then the insurer could argue that you could still work as a doctor just not as a surgeon and the claim may not be paid.
It is also wise to understand that if your policy does not seek your medical history, it is likely there could be limitations to what illnesses are covered.
Another consideration is whether you have stepped or level premiums. Stepped premiums start low and usually increase as you age. Level premiums begin at a higher rate but typically don’t increase until you reach 65. In the long run, level may work out cheaper for some.v You must work at least 20 hours a week to take out income protection insurance and you can usually only buy a policy up to the age of 60. Also, if you receive a payout, you need to declare that income on your tax return.
If you want to check that you have sufficient cover to protect you and your family should you lose your income, then give us a call to discuss.
i Income protection insurance | Moneysmart ( moneysmart.gov.au)
ii The Most Common TPD Claims in Australia with Examples | Aussie Injury Lawyers
iii Income protection insurance | Moneysmart ( moneysmart.gov.au)
v Income protection insurance | Moneysmart ( moneysmart.gov.au)
Choosing between stepped vs. level premiums can feel overwhelming. These payment options have their own pros and cons, and it’s important to pick the one that suits you best. In this guide, we’ll explain the differences between stepped and level premiums in simple terms.
Whether you want predictable costs, long-term savings, or flexibility, understanding these options will help you make the right choice for your insurance coverage.
These days, many people have life insurance in their super account. It’s a good safety net, but often, the amount of cover isn’t enough. A study by Rice Warner in 2020 showed that life insurance in super only covers about 65-70% of what people really need.
Since Covid, this number has gone up. It’s crucial to have the right amount of life insurance, whether it’s in super or not. You should check it regularly as your situation changes. What if something unexpected happens? How would your family manage? Would they be able to pay the mortgage or school fees?
Life insurance is a key part of your financial plan, but there are different ways to pay for it, which could save you money.
The money you regularly pay for life insurance is called premiums. You can pick either a stepped premium, a level premium, or a mix of both.
With a stepped premium, you pay more each year. But with a level premium, you pay about the same every year.
At first, stepped premiums are cheaper. But over time, they can end up costing more than level premiums. Ironically, when you might think of canceling your policy because it’s getting too expensive, it’s probably when you need the insurance the most. This is usually when you have lots of expenses like a mortgage, childcare, or school fees.
Level premiums start higher but usually don’t change much over time. They might go up if your policy is linked to inflation or if you want more coverage.
If you get life insurance when you’re young, the payments are usually lower. This goes for both stepped and level payments.
Let’s say you’re a guy who doesn’t smoke and you want $1 million of life insurance. If you start the policy when you’re 30, a level payment is about 60% more expensive than a stepped payment at first. But if you start when you’re 40, it’s 120% more, and if you start when you’re 50, it’s 170% more.
But eventually, there’s a point where a level payment saves you a lot of money. This is especially true if you keep the policy until you’re 65.
If you start the policy at 30, you’ll start saving money after 23 years. If you keep it until you’re 65, you’ll save about $58,700 over 35 years. If you start at 40, you’ll save about $46,000, and if you start at 50, you’ll save about $10,000. But saving $10,000 is still good.
There are a lot of reasons why you might pick a level payment, especially because it helps you know exactly how much to budget.
But for many people, starting with cheaper payments can make stepped payments more attractive. Also, if you only plan on having life insurance for a short time, like until your kids are grown up or your mortgage is paid off, stepped payments might be better.
Some insurance companies can give you a mix of stepped and level payments, which could help with your money situation.
Count on financial advisors to help you choose the best premium option for your needs. A financial advisor can guide you in making the right financial decisions.
To find out if our strategies are right for you, feel free to contact 360 Financial Strategists online or on 03 9427 0855.
Many superannuation funds provide insurance options such as life, total and permanent disability (TPD), and income protection for their members. When assessing your insurance coverage, it’s crucial to examine whether your super fund includes these benefits.
Take the time to compare these offerings with life insurance through super options available outside of super to ensure you secure the most suitable policy for your needs.
Superannuation funds commonly offer three types of life insurance options for their members:
Most super funds automatically include life cover and TPD insurance for their members, with some also offering income protection insurance. Typically, these insurances are provided without the need for medical checks and cover a specified amount.
In super, TPD insurance coverage often ceases at age 65, while life cover typically ends at age 70. Conversely, outside of super, coverage usually continues as long as premiums are paid.
As per legislation, insurance on inactive super accounts—those without contributions for at least 16 months—will be automatically canceled by super funds. Additionally, individual super funds may enforce their own regulations, requiring insurance cancellation on accounts with insufficient balances.
Your super fund will notify you if your insurance is nearing expiration.
To maintain your insurance through self-managed super funds, you must inform your super fund or contribute to the respective super account.
You may consider retaining your insurance if you:
If you’re a new member of a super fund under the age of 25, or if your account balance falls below $6000, insurance coverage may not automatically be provided unless:
In the event your balance dips below $6000 and you already have insurance, typically, you won’t lose your coverage.
Utilize the Life Insurance Calculator to assess whether life insurance through your super is necessary and determine the appropriate coverage amount.
Navigating superannuation and insurance can be intricate. For assistance, reach out to your super fund or consult with a financial adviser.
Before switching super funds, it’s crucial to review your insurance coverage, particularly if you have pre-existing medical conditions or are over the age of 60, as obtaining desired coverage may not be guaranteed.
To ascertain your life insurance through super funds, you can:
Upon examination, you’ll discover:
Your super fund’s website typically hosts a comprehensive PDS elucidating the insurer’s identity, coverage details, and claim procedures.
If you maintain multiple super accounts, you might be paying premiums for numerous insurance policies, which could diminish your retirement savings. Assess whether consolidating your policies into a single fund suffices or if additional coverage is necessary.
When reviewing your superannuation insurance, scrutinize for any exclusions or premium loadings. Loadings denote a percentage increase on the standard premium, often applied to individuals deemed higher risk due to factors such as occupation, pre-existing medical conditions, or smoking status.
Should you suspect an erroneous classification by your super fund, promptly notify them to rectify the situation, potentially saving on unnecessary insurance expenses.
Count on financial advisors to manage your life insurance and super funds! A financial advisor can guide you in making the right financial decisions.
To find out if our strategies are right for you, feel free to contact 360 Financial Strategists online or on 03 9427 0855.
Protecting your business is crucial, and a buy-sell agreement can play a significant role in ensuring its longevity and stability. A buy-sell agreement is a legally binding contract that outlines what happens to a business owner’s share if they leave the business due to various reasons such as retirement, disability, or death.
This agreement, often backed by buy-sell agreement insurance, can provide a smooth transition and protect the business from unforeseen circumstances.
A buy-sell agreement is a legal contract that outlines how an owner’s share of the business will be handled if that owner leaves the business, usually due to death or permanent disability. This business insurance typically requires the surviving owner to buy out the departing owner’s share.
Here’s a simple example: Imagine two business partners who own equal shares in their business. If one partner dies unexpectedly, their share would go to their beneficiary. The beneficiary might not have the skills or interest to run the business. Without a buy-sell agreement, this could cause problems for the surviving partner. However, with a buy-sell agreement, the beneficiary would receive money equal to their share’s value, and the surviving partner could continue running the business smoothly.
A buy-sell agreement helps business owners manage difficult situations. It protects the interests of family members and beneficiaries by agreeing on a valuation method and usually involves a life insurance policy. This policy provides the surviving owner with the funds needed to buy out the deceased or disabled partner’s share, ensuring the business can continue operating without disruption.
There are different ways to set up a buy-sell agreement, each with its own complexities and possible tax effects. It’s important to talk with your financial, tax, and legal advisors to make sure the agreement is structured correctly for your business.
Protect your business and investments with expert financial insights! A financial advisor can guide you in making the right financial decisions.
To find out if our strategies are right for you, feel free to contact 360 Financial Strategists online or on 03 9427 0855.
Trauma insurance, also known as critical illness insurance, is a crucial safety net for protecting your financial future in the event of a serious illness or injury. This type of insurance pays a lump sum if you suffer from a covered condition, helping to cover medical costs, living expenses, and more. Let’s explore the essentials of trauma insurance and why it might be right for you.
Trauma insurance provides a lump sum payment if you are diagnosed with a serious illness or injury specified in your policy. Common conditions covered include cancer, stroke, and major heart conditions. It’s essential to understand what conditions are covered by your policy, as they can vary between insurers. To further explore your options, consult with a seasoned financial planner.
When assessing your trauma insurance needs, consider the following factors:
Unlike life, total and permanent disability (TPD), and income protection cover, trauma insurance cannot be held within a superannuation fund. This is because it doesn’t meet the condition of release criteria set by superannuation laws. Therefore, trauma insurance must be held personally, and the premiums are paid out-of-pocket.
Trauma insurance is a vital part of a comprehensive financial plan by financial advisors in Melbourne, offering peace of mind and financial support in challenging times. By understanding the coverage and carefully considering your needs, you can make an informed decision to protect yourself and your family. Consult with an insurance advisor to tailor a policy that fits your unique situation.
Managing your finances is another way to build a happier home. Let an expert financial advisor guide you through your journey to financial management!
To find out if our strategies are right for you, feel free to contact 360 Financial Strategists online or on 03 9427 0855.
Total and Permanent Disability (TPD) insurance provides crucial financial protection for individuals facing severe injuries or illnesses that prevent them from working. In this comprehensive guide, we’ll explore the intricacies of TPD insurance, exploring its significance, coverage options, eligibility criteria, and much more.
TPD insurance is designed to offer financial assistance to individuals who suffer from total and permanent disabilities, rendering them unable to engage in gainful employment.
Unlike other forms of insurance, TPD coverage provides a lump sum benefit rather than regular payments. This lump sum can be used to cover various expenses, including medical bills, mortgage payments, living expenses, and ongoing care costs.
There are two main types of TPD insurance: own occupation and any occupation. Own occupation TPD cover pays out if you’re unable to work in your specific occupation, while any occupation cover pays out if you’re unable to work in any occupation for which you are reasonably suited by education, training, or experience.
Understanding the differences between these types of coverage is crucial when selecting the right policy for your needs.
Eligibility for TPD insurance typically depends on factors such as age, occupation, health status, and lifestyle habits. While some superannuation funds automatically include TPD cover for their members, others may require individuals to opt-in for this protection.
It’s essential to review your superannuation policy and understand the coverage options available to you. Additionally, considering factors such as benefit amounts, waiting periods, and premium costs is vital in choosing the most suitable TPD insurance policy.
In the unfortunate event of total and permanent disability, initiating a TPD insurance claim is crucial to accessing the financial support you need. The claims process typically involves submitting documentation, medical reports, and evidence of your disability to your insurance provider.
Seeking guidance from legal or financial professionals can streamline the claims process and ensure that you receive the full benefits you’re entitled to.
Total and Permanent Disability (TPD) insurance serves as a vital safety net for individuals facing life-altering disabilities. By understanding the nuances of TPD insurance, including coverage options, eligibility criteria, and the claims process, individuals can make informed decisions to protect their financial well-being in the event of total and permanent disability.
Investing in TPD insurance offers peace of mind and financial security, ensuring that you and your loved ones are prepared for whatever challenges life may bring.
TPD insurance coverage can be paid for through direct debit or credit card, similar to other insurance policies. However, unlike many other types of insurance, it can also be funded through your superannuation fund. It’s worth noting that many superannuation accounts provide default insurance coverage upon enrollment, so it’s crucial to assess any existing coverage you may already have. Also, consider the impacts of the new Division 296 Tax on what options you have.
Count on financial advisors to manage your TPD claims! A financial advisor can guide you in making the right financial decisions.
To find out if our strategies are right for you, feel free to contact 360 Financial Strategists online or on 03 9427 0855.
Imagine this scenario: You’re a homeowner with a mortgage, a spouse, and two young children. You’re in good health, rarely needing medical attention, and your finances are stable enough to weather a few months without income. But suddenly, you’re hit with illness or a severe accident that leaves you unable to work for a year or more. How will you manage your mortgage, bills, and family expenses without your primary source of income?
Even with savings, the financial strain can quickly become overwhelming. This is where income protection becomes crucial. Income protection serves as a safety net, shielding you from the financial fallout of unexpected events. It’s the difference between maintaining your current lifestyle and facing significant financial hardship. Don’t overlook the importance of safeguarding your income—it’s your lifeline in times of uncertainty. Protecting your income can provide invaluable peace of mind for you and your family.
Many individuals prioritize insuring their life, vehicles, homes, and possessions, yet overlook safeguarding their most valuable asset—their ability to earn an income. Consider this: What would you do if you suddenly lost your source of income?
Instead of risking your family’s lifestyle and well-being, consider investing in income protection insurance. This type of insurance provides a monthly benefit of up to 75% of your gross income, offering financial support while you recover from an illness or injury.
Income protection policies typically offer various waiting periods, ranging from 14 days to 5 years, allowing flexibility to tailor coverage to your financial situation. Additionally, you can select benefit payment periods ranging from 2 years to age 70, ensuring peace of mind during periods of uncertainty.
Keep in mind that shorter waiting periods (30-90 days) and longer benefit periods (up to age 65) come with higher premiums. Factors such as occupation, age, salary, and pre-existing medical conditions also influence premium costs.
Regularly review your insurance needs to ensure you maintain adequate coverage based on your circumstances. Don’t underestimate the importance of protecting your income—it serves as a crucial safety net for you and your family’s financial security.
If you’re looking to protect your income, talk to us about our insurance strategies today.
Contact us online or call 03 9427 0855.
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