Frequently Asked Questions
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Here’s a question about your business assets and how you own them. I see to many times where people have their operating business via their company, but then they hold other assets such as shares, property within the same entity, but even scarier is people have their employees operating out of the same entity. That’s a huge amount of risk you have left yourself open with if an unforeseen event was to occur. Get a second opinion, it’s worth its weight in gold, especially if it protects your assets, you know the hard work you’ve put in to create your current wealth. Is it worth saving a few dollars upfront but leave you potentially 100% financially exposed? Would you want to start again to create your wealth? - One would think not.
Generally speaking a company will cover you for these activities, however you will either have various options such as 3 month waiting period for income protection and you may be offered a 25% loading to your policy so you can maintain the waiting period you nominated which maybe only 1 month. If you ride dirt bikes, there’s every chance you won’t be covered. Another example could be that you decide to try parachuting years later after you took your policy out. You would generally be covered in this instance as you were not involved with this pastime at the time you commenced your policy.
Just because you have a health issue doesn’t mean you can’t get insurance cover. Your health will be reviewed and determined by an underwriter if they can offer you cover. You may be offered terms where you’re not covered for your health issue, such as your knee due to multiple knee reconstructions, but you are covered for everything else. You would be informed by the insurance company before your policy was to commence so you know your terms upfront.
You will find the majority of retail policies are non-cancellable policies, where as a general insurance accident & sickness policy will be a cancellable policy. This means that if you for example you claimed on a busted shoulder you would continue to be insured for your shoulder in the future with a non-cancellable policy. An accident & sickness policy has the option to cancel your policy after your claim. You are unlikely to be insured for your shoulder ever again, where you would continue to be insured with a retail policy. Some standard Retail policies are cancellable polices, you would be informed of this before you commence your policy.
Great question, but the answer is if you have ceased smoking for 12 months, you can apply to have your policy changed to a non-smoking status. If you are a non-smoker and start smoking later in life, your policy will still be deemed as a non-smoker as you were not smoking at the time you established your policy.
Imagine having your health assessed at claim time, which could be 10 years down the track, what is your health like then. Do you want to know what you are or aren’t insured for when you enter the contract or would you prefer to wait at claim time and cross your fingers that your health status allows you a successful claim? Personally I think knowing up front gives you more peace of mind and certainty if you ever have to make a claim. I’m pretty sure if you pay for insurance cover, you will want to receive a benefit if you ever made a claim.
It would be best to affect your cover now while you are still healthy, this way you have every chance of being offered cover without any amended terms. If you lock in your cover at a younger age the premiums are only going to be cheaper than if you take cover out when you’re older. The reason for this is you can lock in your premium costs so your premiums remain cost effective. We have witnessed firsthand people holding off to affect certain insurances at a later date to only then be uninsurable due to a health issue that has happened during that time. Not an ideal outcome, especially if you considered this type of health event as a risk.
We wish this was explained better to people when they take out a home loan. Generally you will find that this insurance cover is insuring the bank in the event that you default on your mortgage payments. Don’t be left thinking you have protection when in fact you don’t.
You may save money now but will you save when you’re expecting a lump sum amount of cover or a monthly benefit for income protection at claim time. The saying goes; you pay for what you get. Make sure you seek a professional who can guide you to a policy that best suits you and not a policy that fine print says…
This may very well be the case, but have you sat down and worked out exactly what level of cover you require? To know the appropriate level of cover you require to suit your needs, an adviser will help you see things from a different perspective asking you all the right questions to determine what needs to be insured and what doesn’t. This will give certainty around what meets your needs if the worst was to happen.
There are two premium structures being stepped and level, stepped premiums will go up every year we get older. Level premiums will be more expensive initially but will remain constant throughout the term of the policy. This is a better cost effective option if you are going to maintain your policy for longer than 10 years. The savings could be thousands.
You generally have the option to amend an existing policy from a stepped to a level premium with a retail product.
It’s a fair statement, the reality is that depending on what specialist you see and where you receive treatment, will come with different costs and different levels of what your health provider will actually cover. This doesn’t mention the costs you may be faced with if any medication was required. For example prostate medication is no longer on the PBS Scheme, so you would have to foot the total bill.
We don’t plan on having these events, however a trauma event could end up being a financial burden on you and your family. No one want’s a second mortgage to recover their health!
Generally speaking you don’t need a medical. The only times a medical will be required is if you have applied for a high level of cover and the insurance company wants to make sure your healthy to insure you. Another reason may be because you have high blood pressure or can’t remember your last reading; due to this the company will want an updated reading to confirm it is being managed.
Pays a lump sum amount in the event of death. This type of cover can be owned either via your super fund or owned by you. If you are self-employed there are ownership structures that will benefit you in receiving a tax deduction.
Total and Permanent Disability Insurance (TPD) is designed to help take the pressure off you financially if you suffer an illness or injury that leaves you totally and permanently disabled. The lump sum benefit paid is often used to pay down debt, pay for medical expenses or fund permanent lifestyle changes.
Provides a lump sum amount in the event of a trauma related illness such as cancer, heart attack and failure of your inner organs.
Will insure you for any type of accident, sickness or illness that prevents you from performing the duties of your occupation. It is designed to insure 75% of your gross income. There are different ownership structures for income protection.
If you run your own business you’re always going to have fixed costs. Are you aware you can insure those fixed costs if you’re unable to work?
This type of insurance will allow you to have in place a funding mechanism that will allow you to payout any respective business partners that involuntary leave your business and will be unable to return. This option takes away the burden of everyone agreeing to a valuation method and having the right funding options in place. Keyman insurance will allow you to have a funding mechanism in place to replace a worker in the business that the business is reliant on for income. If you need to replace a staff member this costs money to the business. Having this type of cover can help minimize any distraction to the business in deriving income.
* Power of Attorney/Health Directives can give you peace of mind that someone you trust can act in your best interest of making decisions for you when you’re no longer capable whether short or long term. Anyone faced dealing with these events without the proper paperwork only know too well how painful it is to deal with a loved ones affairs without the correct paperwork confirming this.
We all know a Will deals with our affairs when we die, but are you aware if you don’t have a Will then you affairs will be dealt with by the state. The state will then decide how your affairs will be dealt with. Is that the outcome you want to leave your loved ones, I’d say no?
A testamentary trust commences at death and will distribute funds to the beneficiaries nominated as stated by the trust deed. This type of document can help ensure that your inheritance passed down will continue to remain the assets of the intended people or persons. If your partner was to re-marry poorly or your siblings get divorced then this will allow the inheritance not to be split & remain with the trust. Giving peace of mind that your hard earn work doesn’t go to someone else. A testamentary trust has its own tax rates, so any income distributed to a beneficiary will not form part of their PAYG income, as this can potentially create tax issues otherwise. It’s not for everyone but someone with a bit wealth should very strongly consider one of these documents to protect their generated wealth.
Financial Planning Advice
Good question to ask. We’ve packaged our fees based on the level of advice you require. Depending on what stage of life you are at will determine the advice you require. You will be charged a fee based on the work involved and you will be informed of this fee before you proceed to the next step.
It is vitally important that you review your debt regularly or even better get your broker to review it for you. Banks are constantly changing their rates & if there is a better rate that can save you money, it would be well worth investigating further. Would you prefer the saving sin your pocket or continue to go to the bank?
Do you pay your loan payments monthly, if so stop right now and change your payments to weekly. This alone has you making 13 payments per year, reducing your debt quicker than the term of your loan.
if you receive any recommendations from a financial adviser then you will be presented with an advice document, otherwise known as a statement of Advice (SOA). This document will stipulate your recommendations, and fees payable along with comparing any existing policies you may have with any recommendations being made. This way you will receive a document that is based around your goals and circumstances.
Is anything in life ever a set and forget strategy. This is no different, especially when it comes to managing your personal affairs for wealth or protection. It is paramount that you always review your existing strategies and policies. Your situation may change and due to this you may need to make changes to your policies or legislation has changed that reflects on you so changes need to be done. Reviewing your strategies and policies just gives you peace of mind that your affairs continue to meet your situation.