Is Worker’s Compensation Enough? 

Is Worker’s Compensation Enough? 

Insurance

No matter what kind of job you have, there is always a possibility of falling sick or getting injured, regardless of the type of work you do.  That’s why every Australian workplace has a health and safety obligation to provide a safe work premises, assess risk and have workers compensation insurance.   What is worker’s compensation?  Worker’s compensation is a form of insurance payment paid to employees if they are injured at work or become sick due to their employment. Payments may cover:   The injury or illness must be work-related to receive worker’s compensation benefits.   Protection at work   A report released by Safe Work Australia in 2023 showed:  Whilst worker’s compensation offers some level of protection, it still only protects you for injuries or illnesses that occur at work or as a direct result of work – and then any claim made must meet eligibility requirements. Entitlements and eligibility for payments vary from state to state in Australia.  If you suffer from an injury or illness that does not qualify for a workers’ compensation payment, there’s a real possibility that you could be left without income to support yourself and pay for the costs of the medical condition.   (An important side note – If you’re self-employed, a sole trader or an independent contractor, you may not be covered under any worker’s compensation scheme, in which case you will need to organise your own protection.)  The best way to cover the gap  While worker’s compensation is beneficial, it may not provide enough financial support for you and your family, even if you have a successful claim.  Considering that the vast majority of Australians suffer from injuries and illnesses not related to work, relying on worker’s compensation alone may leave you short on financial protection.   So, how can you ensure you have the best safety to protect yourself when you can’t work?   Income Protection  Income Protection goes to work when you can’t and can cover you for well beyond what worker’s compensation may provide.  Although worker’s compensation might provide some coverage for injuries and illnesses sustained at work, including Income Protection in your personal protection plan can give you peace of mind knowing that you’re covered in various situations, both at and outside of work. This way, your ability to earn an income will be secured.  If you want to explore your options for Income Protection, get in touch with your financial adviser today.  The information provided in this article is general in nature only and does not constitute personal financial advice.  

An often forgotten aspect of insurance

An often forgotten aspect of insurance

Updated on Economy, Insurance

When most people think about financial planning, they tend to focus on the wealth creation side of things, but often forget about the wealth protection. Building a financial plan without adequate insurance is like building a house on flimsy foundations. Comprehensive insurance cover can be a significant expense; however, these costs can be made more affordable by taking advantage of the tax deductions that apply to specific types of insurance, and to some methods of implementing insurance. Income protection Due to the high frequency of claims, premiums for income protection insurance can be quite high. However, they are tax-deductible, so the cost is discounted at the same rate as the policy holder’s marginal tax rate. For example, someone on a marginal tax rate of 39% (including 2% Medicare levy), paying a premium of $1,000 would have an out of pocket cost of just $590, after the tax deduction is claimed. It needs to be remembered, however, that any benefits paid under an income protection policy are treated as assessable income, and therefore subject to tax. Life insurance While the premiums for life insurance are not normally tax-deductible to individuals, there is a simple way to gain a tax benefit. Superannuation funds can claim a tax deduction for the life insurance premiums they pay. So, by taking out life insurance via a superannuation fund, a similar result can be gained as if the premium was deductible to the person taking the insurance. Using superannuation to provide life insurance has another potential benefit. As premiums are paid by the fund, it reduces the pressure on household cash flow. This may reduce the ultimate superannuation payout, but if the savings made outside of super are used wisely, the overall financial position should be improved. The proceeds of life insurance are generally not taxable. However, a death benefit paid from a super fund to a non-dependant may be subject to some tax. Total and permanent disability insurance (TPD) TPD insurance is usually attached to life insurance. From a tax perspective it’s treated in a similar way, so implementing it via superannuation is usually the most tax-effective way to do it. However, TPD policies held in super must have a stricter definition of what constitutes ‘total and permanent disability’ than similar policies held outside of super. Trauma insurance Trauma insurance pays a lump sum if the policy holder suffers a defined medical condition or injury. It cannot be implemented through superannuation. Premiums are not tax-deductible, but benefit payments are not subject to tax. As with investing, the main focus on insurance shouldn’t just be on saving tax. It is a protection tool. Always talk to a qualified adviser to ensure you get the appropriate level of cover, and the most tax effective way to implement it.   The information provided in this article is general in nature only and does not constitute personal financial advice.

Don’t leave your family’s future in the hands of a crowdfund

Don’t leave your family’s future in the hands of a crowdfund

Updated on Insurance

If there is anything we have learnt in the last two years, it is just how quickly things can change. Between devastating bushfires, floods, and a life-altering pandemic (just to name a few), being prepared for the unexpected has never been made more apparent. As confronting as it may be, it is essential to be aware of the grim possibility of unexpected death and the financial impact it would have on our family. Are they prepared and able to cover funeral costs? Will there be sufficient funds for living expenses? For mortgage repayments? It is a harsh reality but one we all cannot afford to ignore. Unfortunately, approximately 58% of Australians have done just that and do not have enough life insurance cover to allow their loved ones to continue living at the same standard they were before the passing of a family member. This issue of under-insurance leaves many desperately scrambling for ways to make up the shortfall and turning to options like ‘crowdfunding.’ Whether via social media or news articles, we often encounter a devastating story that tugs at our heartstrings and our human desire to help others. Mainly in the form of ‘GoFundMe‘ pages, we see devastated families turning to the generosity of others to raise funds. And while there is nothing better than seeing people coming together and supporting those in need, we cannot rely on the goodness of others to help us financially in the tragic event of illness or death. Heartbreakingly, less than a third of crowdfunding campaigns reach their fundraising goals. Additionally, most crowdfunding programs charge additional fees just to start your campaign. Appropriate personal insurance is the only sure way to guarantee a financially secure future for you and your family, no matter what obstacles life may throw your way. Life insurance calculators are a great starting point; they are an easy-to-use tool that considers age, number of dependents, assets, debts, and more, to give you the most accurate estimate of insurance cover for your circumstances. For tailored, expert advice, speaking with an experienced financial adviser will help you secure the most cost-effective and suitable cover for your individual needs. You’ll also feel protected knowing your policy will be reviewed regularly to ensure it covers your current circumstances.   The information provided in this article is general in nature only and does not constitute personal financial advice.

DIY insurance – is it right for you?

DIY insurance – is it right for you?

Updated on Insurance

Research shows that Australians are underinsured which has led to the proliferation of television advertisements promoting personal insurance cover. Are these quick and easy plans suitable for your family? Research undertaken by Rice Warner in 2017 revealed that on average Australians had Life and Income Protection insurance meeting only 61% and 16% of their needs respectively. Cover for Total and Permanent Disability was as little as 13% of people’s needs. The cause may be attributed to peoples’ uncertainties surrounding medical examinations, probing application forms, costly plans and persistent salespeople. Companies advertising on television attempt to eliminate some of these fears and often advertise products where: cover will generally be accepted without a medical examination, policies are easily arranged on-line or via a single telephone call, and premiums are competitive. For some people, these plans offer a practical solution; particularly older people, perhaps without dependents, who no longer have large financial commitments. But if you have dependent children, a mortgage and other monetary obligations, and you wish to plan ahead for your family’s financial future, would a do-it-yourself product suit your needs? Ask yourself the following questions: How can I know how much insurance I really need? How do I ensure my family won’t be financially worse off after an insurable event? Would the family home need to be sold if the household income was reduced? How do I ensure my children can afford the right education to start them off in life? What if I became sick or injured and was unable to work for a significant period? If these issues concern you then it’s likely that you need a more tailored risk management plan. Discussing your circumstances with your financial adviser will ensure that your particular needs and goals are addressed. And as your situation changes, for example, welcoming a new child, your adviser can review your plan and update it as necessary. Most people recognise the importance of car or home insurance, but neglect to consider their lives or their ability to earn an income. Given this, off-the-shelf insurance products fulfill their purpose as it can be said that encouraging people to take out some insurance is better than having no insurance. But if a risk management plan specific to your family’s future security is important to you, it might take more than a short phone call to arrange, while the peace of mind it brings will last a lot longer.   The information provided in this article is general in nature only and does not constitute personal financial advice.

Personal Insurance FAQs

Personal Insurance FAQs

Updated on Insurance

Personal insurances are designed to provide protection from the financial consequences of death or disability. They therefore form an important part of most financial plans. Here, in brief, is how they work. What are the different types of personal insurance? Life insurance. This pays a lump sum benefit if you die. Total and permanent disability insurance (TPD): This pays a lump sum benefit if you meet the definition of being totally and permanently disabled. It is often bundled with life insurance. Trauma insurance: Also referred to as recovery insurance, trauma insurance pays a lump sum benefit if you are diagnosed with or suffer from one of the specified illnesses, such as cancer, heart attack or stroke. Income protection insurance: If you are unable to work due to illness or injury, income protection insurance will pay you a regular income, usually capped at 75% of your pre-illness income. You can select the waiting period before benefits become payable, and the length of the benefit period. How much life insurance should I have? For life and TPD cover, one rule of thumb is to work out how much is needed to pay off debts and provide for current and future family living expenses. Subtract from this total the value of current investments, including superannuation, to arrive at an approximate value of the insurance cover you require. Of course, individual circumstances vary widely. Your financial adviser will be able to help you assess your needs and resources and perform the relevant calculations for you. How often should I review my cover? Your personal insurances should be reviewed whenever there is a major change in your personal situation. Key events to look out for include: • Taking out a home loan• Getting married or setting up house with someone • Starting a family• Receiving an inheritance• Retirement Generally, as savings increase and debts decrease, the level of cover required reduces over time, but again, much depends on your individual situation. How do I understand my insurance contract? It’s important to understand what is and isn’t covered by your insurance. This will be detailed in the Product Disclosure Statement, so it’s important to read and understand this. If you are unsure about anything, ask your adviser for an explanation. How do I choose the best insurance? While pure life insurance is pretty straightforward, the other personal insurances may differ significantly from policy to policy. Definitions of diseases may vary. There may be a range of optional extras – some valuable, others more of a gimmick. With TPD insurance, you may have the choice of ‘own occupation’ or ‘any occupation’. Insurance companies vary in the speed with which they process claims, and beyond that is the question of which insurances should be held via a superannuation fund and which should be held directly. All this complexity means that selecting the best insurance cover is best done with the help of an experienced financial planner. More than one third of Australian families have no life insurance cover. Many more are under-insured, even though the financial impact of not being adequately insured can be severe. Put your mind at rest. If you have any concerns about the level of protection provided by your current personal insurance policies talk to us today.   The information provided in this article is general in nature only and does not constitute personal financial advice.

What does a good financial adviser do?

What does a good financial adviser do?

Updated on Aged Care, Budgeting, Economy, Finance, Insurance, Investing, Retirement, Superannuation

Some people may think that a financial adviser’s role is to forecast the direction of the share market from month to month and invest clients’ money accordingly. This is not the reality, of course. Investments are only one small part of what your financial adviser can provide for you. Consider for a moment the number of websites, newsprint and broadcast time dedicated to financial topics these days. Australians seem to have an insatiable appetite for understanding finance. Whether it’s the latest share market activity, economic news or the constantly changing tax and superannuation rules, a licenced financial adviser can help answer your burning questions and save you the hassle of finding it yourself. Usually, the benefit you receive from a financial adviser can be spelt out in dollar terms. It might be the income tax you have saved by re-structuring your salary, or a new concession from the Australian Tax Office (ATO) or Centrelink that you didn’t know you could get. The finance section of your newspaper or online magazine probably includes a regular “advice” or “Q & A” column. By law, these columns must warn readers that the advice does not consider your personal situation or needs, and you should consider its appropriateness before acting. In setting your financial strategy, a good financial adviser will take the time to get to know you and your circumstances. This means that everything recommended to you—the investment portfolio, super contribution strategies, savings plans and insurance advice—is tailored to your personal needs, goals, and tolerance to risk. As the years go by, your financial strategies will need adjusting due to changes in the broader environment or something closer to home. Whatever the case, your adviser is there to help you make the most of the good times and the bad. And a regular financial review doesn’t always mean major changes, but at least you’ll know that you’re on the right track – and not having to do it alone. Quality, knowledgeable advice is critical, and wherever you are on your financial path, now is always the best time to talk to us.   The information provided in this article is general in nature only and does not constitute personal financial advice.

Reviewing your insurance as you get older

Reviewing your insurance as you get older

Updated on Insurance, Retirement

So, you are seriously starting to think about your retirement. The kids are finally more independent, the mortgage is less than it was, and the super is more than it was. You look at your monthly bank statements and one particular debit is always there. The insurance premium. You have been paying it diligently for years now, maybe decades. But, for what? You’ve not claimed and ‘gained’ anything so far. At this stage and age, it might be very tempting to cancel your policies and save a few dollars. Before you do, just consider what you could be losing in a future that’s not yet written. It could be hundreds of thousands of dollars. More to the point it could be your home, your lifestyle, or your health – the very thing you are hoping to protect. Statistically you are more likely to claim the older you get. Look at these figures:   Type of cover Average age people cancel policy Average age people make a claim Income Protection 45 46 Total & Permanent Disability (TPD) 49 48 Trauma Insurance 44 49   People often don’t realise an insurance policy is not an ‘all or nothing’ concept and there are options available. For example, as you get older and your debts and commitments reduce, so might the level of cover you require. When cover is reduced, so is the premium. Take care though, once a policy is in place it’s easy to reduce the cover but much harder to increase the amount, particularly as you get older. It often only takes a phone call to lower the amount but countless medical tests to increase it or apply again. Before you rush off and reduce your cover, it’s important to tailor the amount of cover to your potentially changing circumstances, and this is where we can help. There are many other options available including requesting a temporary freeze on the premiums; paying annually instead of monthly; moving your cover into your super fund (this is not applicable to all insurance however); or given that your adult children will usually be the ones who will eventually benefit, ask them to share the cost of the premiums! The basic idea of insurance is not to put you in a better position than you were – it’s there to protect what you have. Regardless of what age you are, think twice about cancelling insurance completely. There are always other options available. Ask us for guidance before you make any decisions.     The information provided in this article is general in nature only and does not constitute personal financial advice.

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