Tuesday, September 20, 2011

Top 5 misconceptions about life insurance

1. It won't happen to me
It's easy to take your health for granted, particularly if your young, fit and active.  But everyone knows someone who's experienced a serious illness or injury.  You know it happens and it can happen at any age.

  • 1 in 2 Australians will get cancer
  • 1 in 6 men and 1 in 4 women will suffer a disability that will prevent them from working for more than 6 months
  • 1.7 million Australians under the age of 65 live with a physical disability
  • 2 out 5 Australians will suffer a critical illness before they reach 65

2. I've got life insurance inside my super

If you're an employee, chances are you will have some group life insurance cover inside your superannuation fund.  But do you actually know how much you have?

Group life cover is usually based on your level of salary.  But it doesn't take into account your level of debt or the number of dependents you have which are crucial factors to consider when determining your insurance needs.

If you have a young family, Rice Walker Actuaries recommend insurance 10 to 13 times your annual pre-tax income.  Your actual insurance needs may be higher or lower than this range, depending on your age, your debt levels and the number of dependents you have.  Based on the Australian average wage that's between $662,000 and $860,000.  Considering that the average insurance amount payable from superannuation is only about $70,000, it is clear that many Australians are dangerously under insured.

3. I'll be covered in some other way

Many people believe that if something happens that they will rely on financial assistance from Worker's Compensation, Government Assistance or Health Insurance.  While some level of assistance is often available from these sources there are some things you need to know about the level of support you will receive.
  • Worker's Compensation Insurance - gives you financial protection against work related injury and provides income replacement and payment of medical costs for eligible workers.  It doesn't cover injuries that happen away from work, nor does it cover self employed, sole traders or independent contractors.  Payments are also capped so the level of protection may not meet all your needs.
  • Social Security Payments - will provide some financial assistance for people with an illness, injury or disability, however you do need to meet eligibility guidelines to get this assistance.  Current cover for a couple aged of 21 years is $505.70 per fortnight each.  That's a combined income of $26,296 per year, which is less than half of the average Australian income.
  • Private Health Insurance - it can help with a number of specified medical expenses but it can't help you keep up with your everyday living expenses, like your mortgage.  Benefits are often capped and may still leave you with a gap to pay out of your own pocket.

4. I'll use my savings or my Super

When you have a good level of savings or a large amount of superannuation it may seem like you've got a good safety net if you can't work for a while, but combine a lack of income with increased medical expenses and you might be surprised just how quickly your savings can evaporate particularly if you are still paying off debt.  Relying on your savings and super can also jeopardise your future financial plans and goals. 
Accessing your super isn't as easy as you might think, most super funds have pretty strict rules regarding accessing your super funds before the age of 65.

5. It's too expensive

When you have got so many things to spend your money on, insurance may seem like an unnecessary luxury, but think about some of the costs associated with injury and illness, like hospital and medical expenses, then think of the lost income that could result from months or even years out of the workforce. 

You wouldn't dream of not insuring your home or your car, so why would you value your ability to earn an income (your most important asset) at risk. 

$500,000 of life cover, $100,000 of TPD and Trauma Cover, and $3,000 per month of Income protection starts from as little as $3.00 a day for a 35 yr non smoking office worker.

Insurance doesn't have to be expensive, so contact us now to find out just how affordable your peace of mind is. 

Wednesday, September 7, 2011

Childhood expo highlights the need for insurance

I recently attended the Childhood Expo at Newcastle Panthers that was organised by the Child Alliance and couldn't believe how many businesses and products there are to service the needs of families with young children.  There were educational products and services, health products and services, child care services and much much more, in fact it was quite overwhelming!

All the products and services though had something in common, they all promoted family harmonisation as being the holy grail of a happy life and they're right.  Let's face it, if everything is going well at home pretty much everything else is going well too.

What did amaze me though was that people who were intelligent, caring parents that were looking for more options to improve their own lives and their children's were completely ignorant about their financial security.  Let's face it, we all want to give our kids the best start in life, with good health and educational opportunities, it's normal, in fact I tend to think it is hardwired into most of us to hope that our kids will do better than we did.

I spent most of my time at the expo talking to young parents, asking them about what they think is the most important thing they can offer their child besides love?  Nearly all of them answered "financial security and opportunities to be their best".  My next question was how do you give that to them, their answer "by working hard".  A great answer, as long as you can work hard.  Most of the people I spoke to had no personal insurance outside of their superannuation fund and even then, most didn't know how much they had or had even considered how much they need.

Seriously, I can't believe that people who obviously love their children and want the best for them can be so uneducated and ill informed about what could be the most important financial decision of their children's lives. 

Imagine just for a moment, the picture of the perfect family, happy, healthy and successful - there is a terrible car accident, the Mum is left fighting for her life and the father is killed instantly....what happen's to the kids?  Does anyone know?  Not one person I met could tell me what was going to happen to their kids, if something happened to them.  Most ummed and ahhed and then mumbled something about their retired parents taking the kids. 

The fact is most people don't have a plan, they usually don't even know they need one because we all walk around thinking we are going to live forever and for those of us that have come to terms with the fact we are going to die we like to picture it happening very peacefully at the ripe old age of 90 or more, after fulfilling all our ambitions and dreams.  Unfortunately for most people, that is not how it will happen - somewhere along the line there will be accidents, illnesses and maybe even premature death at a fairly young age.  While we can't always control what happens in our lives we can have a plan to deal with it.  Just like you teach your kids the family emergency plan in case of fire or flood etc, you need an emergency financial plan to help you to deal with life's unexpected turns.

Do you know what will happen to your kids if something happens to you?

If your not sure, I would urge you to sit down and talk about it with your partner, your parents and especially your insurance adviser and your solicitor.  Every parent needs a plan to make sure their children are protected even if they can't be around.
 Call us now on
02 4925 6125
we can help you with your own personal emergency plan.