Posts Tagged ‘write off your debts’

Protecting the life (and people) you love

Monday, March 13th, 2017

With more Australians having children later in life, starting a second family and carrying significant levels of debt well into their 50s and 60s, life insurance has never been more important.

Life is full of unexpected twists and turns and you never quite know what is around the corner. Protecting your family against the loss of all the things you have worked hard for over the years is the cornerstone of a sensible strategy to defend your wealth and current lifestyle.

Although most people know this, being ‘underinsured’ – or holding insufficient life-related insurance cover – remains common across all age groups in Australia.

The underinsurance problem

Australians are famous for their laidback attitude and, unfortunately, that attitude often extends to taking out life insurance protection for their families. While research shows more than three-quarters of us understand the need for life related insurance, rating it as important or very important, only 52 per cent of those surveyed said they actually held some form of life insurance.i

Consulting firm Rice Warner has calculated that Australians should hold a total of $4,581 billion in life insurance to be considered adequately protected, but the actual figure held is only $1,811 billion.ii

Although the typical middle-income Australian family with two children needs an estimated $680,000 in life insurance cover to be considered adequately protected, Rice Warner found that the median level of life insurance held by these families is only $258,000.

Paying your bills and protecting your dreams

Without adequate life insurance protection, the financial burden arising from a serious illness, accident or death can cause severe financial hardship.

Such an event is not uncommon, with the Lifewise/NATSEM Underinsurance Report noting 18 families in Australia lose a working parent every day of the week. One in five families is affected by the death of a parent, a serious accident or an illness that renders a parent unable to work.iii

Increases in the number of second and blended families and ageing parents also mean many breadwinners now have more people than ever relying on them financially.

Life insurance protection is also essential for singles, as they often have fewer resources to fall back on to pay their debts and ongoing commitments such as rent and mortgage repayments if they become seriously ill or disabled.

Guarding your wealth

When it comes to developing a comprehensive strategy to protect your financial position, life insurance is a key component as it creates a safety net to protect your current lifestyle and the wealth you have accumulated.

Without adequate insurance protection, many families find themselves facing real financial hardship if the main or secondary income-earner, or the primary carer of the children, becomes sick or dies.

It’s important to look at your options in terms of life-related insurance as part of your financial goal setting. These products provide a highly effective way of protecting assets such as the family home, covering commitments such as credit card debts, paying large medical bills and avoiding being forced to sell off investments assets cheaply.

Life insurance benefits can be used in different ways depending on your personal circumstances and health, with the lump sum payment they provide easing the financial burden during what can be a very difficult time.

A tailored approach

For a complete wealth protection strategy, death cover is usually combined with other life-related insurance products such as critical illness and total and permanent disability (TPD) protection.

  • Life insurance pays a lump sum on your death or diagnosis of a terminal illness, 
  • Critical illness (or trauma) cover pays an agreed amount if you are diagnosed with a specified critical illness, such as cancer or heart disease,
  • TPD insurance provides you with a tax-free lump sum if you are permanently unable to work due to accident or illness.
    These life-related insurances are designed to provide protection against the most common adverse life events and provide you with peace of mind so that if the unexpected happens, you and your loved ones have some protection.

If you would like some advice on the right mix and amount of life insurance for your family and financial circumstances, don’t hesitate to give us a call.

i www.tal.com.au/about-us/media-centre/life-insurance-lacking-in-those-with-most-to-lose

ii http://ricewarner.com/wp-content/uploads/2015/10/INFOGRAPHIC-UnderinsuranceinAus2014.jpg

iii www.lifewise.org.au/downloads/file/aboutthelifewisecampaign/2010_0203_LifewiseNATSEMSummaryA4FINAL.pdf

General Advice Warning This information is of a general nature only and neither represents nor is intended to be specific advice on any particular matter. Michael J Berinson Pty Ltd strongly suggests that no person should act specifically on the basis of the information contained herein but should seek appropriate professional advice based upon their own personal circumstances. Although we consider the sources for this material reliable, no warranty is given and no liability is accepted for any statement or opinion or for any error or omission.

You can afford Life Insurance

Monday, September 5th, 2016

social-security-benefits-14709334

In a recent study found that 95% of families didn’t have adequate levels of insurance.

One in five families are likely to be impacted by the death of a parent, a serious accident or illness that renders a parent unable to work; The typical Australian family will need to cope on half or less of their income as a result of under-insurance.¹

With so many families without adequate cover, unexpected financial pressures on top of a serious heath event can put significant strain at a very difficult time.

Understanding their finances are one of the main reasons Australians fail to protect themselves and their families. How can I afford the premiums? Here’s how.

Insurance cover through super

Did you know that you can pay your insurance premiums through your super? This may assist you with paying insurance premiums when you have a low disposable income.

Other ways to pay for cover

You can make contributions to your super fund and gain tax benefits:
• If you’re eligible to salary sacrifice to super, you can have premiums paid from pre-tax dollars. And because your super fund may be able to claim a tax deduction for the premiums, you may not need to pay tax on the contributions.
• If you’re self-employed, making a personal contribution to super from after-tax income to cover premiums lets you claim a personal tax deduction.

You could also:

• take advantage of tax offsets of up to $540 by making a super contribution to your low-income spouse ² 
• make personal contributions to super, and if eligible, qualify for a Government co-contribution of up to $500³

1 Lifewise/ NATSEM underinsurance report 2010
2 Subject to eligibility
3 Eligibility for the co-contribution applies.

Source: AIA Australia Limited