Tag Archives: Insurance

Celebrate your family’s financial security

Towards the end of each year we always focus a lot on celebrating Christmas and New Years, however there’s something else we could also celebrate post-Christmas. We’re talking about celebrating your family’s financial security by having personal insurance in place. Having personal insurance cover in place means you and your family won’t have to deal with financial stress in the event of you being unable to earn an income or even passing away. Ideally all your personal insurance covers should be in place prior to the “Silly Season”, however if you haven’t done so already the new year is a perfect time to review your insurance needs.


With all the festivities and celebrations over and done with, for most of us it’s now time to pick up the pieces and start the New Year a fresh, which is a perfect time to review your personal insurance needs. Research from one of Australia’s largest personal insurance companies have found that only 37% of Aussies aged between 18-69 actually have life insurance and even more disturbingly only 18% have disability cover and income protection insurance. Further findings include how Australians are grossly underinsured. It’s estimated that the underinsurance gap in Australia is approximately $1.8 Billion, meaning there are a lot of Aussies out there who believe they have sufficient insurance cover, but in fact don’t. For most of us, we don’t like to think about insurance and when asked about how much we have, the first response is usually “I don’t know”.


So we come to a point where you should ask yourself, do you need personal insurance? The main reason you would put in place insurance cover, is to secure your family’s financial wellbeing. So if you have a mortgage, loans, kids etc… chances are you will need personal insurance. The question you have to ask yourself is, “if I’m unable to earn an income tomorrow, what would happen”? Then for those of you that already have some form of insurance cover in place, the question you should ask is “how do I know the level of insurance I already have in place now is adequate?” The short answer is to seek professional advice.


Whether you don’t have any insurance at all or looking to review your insurance needs, the best thing to do is see someone who is a professional in the area. Financial Planning firms such as JBS Financial Strategists will be able to determine what your insurance needs are and then formulate a strategy to ensure you have the correct and adequate cover in place. So as a new year’s resolution, do yourself a favour by ensuring you have adequate cover in place so you’ve got something else to celebrate about (your family’s financial security).


– Andy Lay –

Insurance – You need someone you can rely on

The Australian & Securities Investment Commission (ASIC) have outlined the level of insurance claims which are declined each year by insurers:


ASIC revealed those who implemented their insurance via an adviser had a higher percentage of claims approved compared to an individual who purchased a policy direct from the insurer.


The value of obtaining advice when seeking to protect yourself and your family against the unthinkable should never be underestimated. The levels of insurance cover regularly run into the millions, and our clients are often surprised of how financially exposed they are should death, illness, or injury occur.


We are talking big numbers here, and when it comes to protecting your family, professional advice should always take precedence.


Without professional advice it can be very difficult to determine the level of cover required, which insurer to use, how the policy should be owned, and which type of premiums to select. Add to that going through the application and medical process it’s no revelation that many Australians are under-insured, especially those who choose to implement the insurance themselves.


In many cases, were it not for the adviser, those clients would likely either not start the process, or give up part way through.


There is a lot of value that advisers add to the insurance process, however in our experience, helping a client through an insurance claim is where we make the biggest difference.


We have had an unfortunate number of our clients claim on their insurance policies over the years. These have been due to death, permanent disablement where the client was unable to ever return to work, as well as a large number of claims due to cancer, and other illness / injuries where those clients were unable to work for a period of time.


Almost all of these client’s said the same thing to us upon receiving their claim payments, ‘there is no way I could have completed the claims process without you’.


There are a number of reasons for that. Claims require medical and sometimes financial evidence to be provided, and the forms can get quite technical. Paperwork isn’t fun at the best of times, but when a family is dealing with serious illness or death, it’s good to have the professional support of a Trusted Adviser.


We at JBS know we play a critical role in developing a protection strategy, and our true value shines through when a claim occurs.


It’s comforting for our clients to know they can rely on JBS to provide appropriate insurance advice, and be there to provide comfort, support, and take the pressure off at a very challenging period in a client’s time of need.


When it comes to insurance advice and claims, that’s the type of reliability you want.

Real Story of Loss & Survival

Have you ever imaged the difference an insurance benefit could make in your life?  Below is a real life story of a JBS client who made the smart decision to protect themselves, and whose life has been transformed as a result.


At the time of his diagnoses, Steve*, aged 52 had just changed employment, taking on a lower paid role in a more challenging but better-suited environment.  With less than $20,000 in savings, the next few years had to be carefully managed from a financial point of view.


JBS received a phone call from Steve earlier this year who advise he was looking to cancel his Trauma and Income Protection policies due to cost.  We reviewed his financial position and income requirements, and determined his cash flow position justified retaining the insurance.  After reiterating the need for the insurance, Steve agreed to retain the cover.


Less than a month after, Steve was diagnosed with Cancer.  He stopped working immediately to begin the treatment and recovery process.  Steve had full private health insurance, however was left with out-of-pocket medical expenses totalling more than $20,000 after just 3 weeks of consultation and treatment.  This cost was expected to rise and with no employment income, financial stress began to set in.


JBS commenced the claim process, arranged all the required paperwork, corresponded with the insurer, and had the claim proceeds paid into Steve’s bank account within 8 days.  The Trauma claim payment of $150,000 allowed Steve to fund his medical bills and ongoing living expenses which removed all financial stress, and more importantly allowed him to focus on what really mattered which was his recovery.


Steve is recovering, however yet to return to work.  His Income Protection is providing him with around $10,000 per month which is sufficient to pay for his ongoing treatment, living expenses, mortgage repayments etc.


Around 4 years before his diagnosis, Steve initially met with JBS to discuss his goals & objectives, and financial planning needs.  Part of the advice JBS provided included Trauma and Income Protection and fortunately Steve listened and now, looking back, says it was one of the best decisions he had ever made.  Each year since that initial meeting, JBS engaged Steve to ensure he remains on track with the plan JBS set, as well as to regularly outline the important of his insurance levels.


Even this early on into his treatment and recovery Steve often thinks about what his life would have been like had he not had the financial support Trauma and Income Protection provided.


Steve’s diagnoses is not uncommon.  What is uncommon is the lack of insurance cover many people here in Australia have and the challenges that poses when illness / injury occurs.


During 2016, over 100,000 people here in Australia made an insurance claim on either a Life, Permanent Disablement, Trauma, and / or Income Protection policy.  Over $9 billion was paid to people like Steve.


Think about this:

– Not one of these claimants expected to claim on their insurance.

– If these claimants hadn’t received the $9 billion from their insurance policies, where else would they have got that kind of money?

– This is not a one-off statistic:  over the previous 5 calendar years the total claims paid out from the leading Australian insurers totals just under $35 billion.


That’s a lot of people who didn’t ever want to claim – but had to.  How glad do you think they and their dependents were, to have been wise enough to take the good advice of their adviser and plan for the unexpected?


Life isn’t always a smooth ride.  Should your health take a turn for the worse, you want to ensure you’re appropriately covered so you can meet the challenge head on.  Without the appropriate level of insurance, the financial stress could make your recovery a very tough hurdle to clear.


– Glenn Malkiewicz –

Mistakes People Make When Buying Insurance

Purchasing insurance is the most effective method to protect our families and ourselves, financially against unforeseen circumstances.  Often however, people make simple mistakes whilst purchasing personal insurance cover.  Here are some of the mistakes we find people make.


Purchasing insurance online or over the phone without professional advice


insurance-2This point refers to all those commercials you see on TV about how you can buy insurance cover over the phone in 5 minutes without any medical and lifestyle questionnaires. When you buy insurance over the phone or online, the assessment process will seem to be very simple and fast.  This type of insurance is what we refer to as direct insurance.  Although simple to implement, direct insurance comes with more risks as direct insurance cover can mean assessment is carried out at the time of claim.


For example you might call up an insurer that you’ve seen on TV and get your insurance cover in place. 3 years later you suffer from a medical condition and need to claim. As the assessment wasn’t carried out during the application stage, it’ll be carried out during the claim stage. During assessment process, the insurer will assess you medically and financially for both the claim and from when you started the policy.  If the insurer discovers that you’ve had medical conditions prior to taking out the insurance policy, they could potentially void your claim altogether, meaning they cancel the policy as if you never held it.  This ultimately means you have been paying 3 years’ worth of premiums for an insurance policy which provided you with no cover at all.


Going through professionals such as a financial adviser, should mean you’re assessed at the time of application.  Although the process may take a little longer, it means you and your family have some certainty when you are accepted at application time, rather than be declined payment because of something you didn’t disclose during application stage.


Only considering price rather than value of the product(s) purchased


Price can often play an important part in your decision to buy personal insurance, but it should not be the only factor to consider. Find out about things like:


–  Additional benefits and definitions of the policy
–  What types of benefits are included and excluded
–  Claims payment procedures
–  What exclusions or limits exist on the cover
–  Ownership options


Price should not be the only consideration when purchasing insurance. That good old saying of ‘You get what you pay for’ applies here. Cheap generally means a lesser policy.


Implementing the wrong levels of cover required


We often find many people implement insufficient insurance covers in order to save money on premiums or they simply don’t know what to include when assessing their need for cover.  Whatever the case underinsurance could leave you and your family in financial strife.


These are just some of the questions you need ask yourself whilst implementing death cover.


If you were to die prematurely which option would you prefer for your partner?

–  Repay the home loan and never have to work again
–  Repay the home loan and not have to work for 5 years
–  They lose the house and have to return to work immediately
–  They can fend for themselves


Additionally would you also want the following expenses covered?

–  Funds for funeral expenses, medical expenses and legal expenses
–  Funds for the children’s education
–  Funds as an inheritance for kids and your partner
–  Purchasing insurance with premiums that increase as you get older


As you get older the chances of you suffering from a medical condition increases, therefore insurers tend to charge higher premiums for older Australians. This causes many people to cancel their cover simply because the premiums (costs) keep getting higher each year with their age.


You also have the option of purchasing your insurance with level premiums. This means the premium can be averaged over the lifetime of the policy and will not increase each year with your age (Cover and premiums can increase by CPI).


Another option is to reduce your sum insured which will reduce your premiums.  As you get older, your expenses and debts such as the mortgage tend to reduce.  Therefore you can reduce your level of insurance cover depending on your situation, which in turn will reduce the premiums payable.


Not reviewing your situation and your cover as life events take place


Certain events that occur in our lives can make a massive impact on our financial needs. Events can range from the birth of a baby to repaying the mortgage, receiving a promotion or re-entering the work force.


Every time there are certain changes to your life, you need to review your insurance cover. Picking up that phone and having a chat to your adviser, could mean you and your family receive the much needed additional cover. Or it could even mean savings in premiums as the existing cover you have may be too high and needs to be reduced.  Whatever the case it’s important to review your insurance needs every time a certain life event occurs.


If you want to know more or thinking about putting in place personal insurance cover, please contact JBS Financial Strategists.


Is Your Industry Super Fund Protecting You?

“It’s ok I have insurance cover through my super” is a popular response I get when talking to friends and family about the need for personal insurance cover. It’s true that most of us do in fact have personal insurance cover through our super funds, however have you ever taken a closer look at what you actually have?


Quite often, the default cover provided by industry super funds has absolutely no correlation with your needs and only provides minimal cover. Let’s take a look at Death / TPD and Income Protection a bit closer as these 2 types of insurance covers are the most common types of insurance policies offered by Industry super funds.



Income Protection
With income protection you’ll most likely find the automatic cover may have long waiting periods, up to 90 days (3months), which means claim benefits will not be paid until the end of the waiting period. The question you have to ask yourself is this, “can I sustain my living expenses for 3 months without an income?” If the answer is no then you really have to wonder whether the default cover through super is sufficient. Furthermore benefit periods on default covers are usually 2 years, which means in the event of a successful claim, you’ll only receive benefits for maximum 2 years. After this point the claim benefits will cease, which won’t do much good if you’re suffering from long term injury or illness.


In addition, as the money has to pass through your superannuation account, the benefits are basic in nature to ensure that it meets the strict rules on releasing money from superannuation, particularly when preservation age or retirement requirements have not been met. This may mean that you are unable to work but may not qualify for a claim.


Death and TPD
Depending on your age you may also have default Death and TPD cover. Great! This means your family is covered in the event of your death and or total disablement, right? Well, let’s take a look at the details. For example, if a 28 year old male was to open a new industry super fund, he may be entitled to approximately $150,000 – $290,000 of death and TPD cover. The amount of cover depends on his age and which industry super fund he is with. Even if we took the best case scenario and presume he receives the full $290,000 of default death and TPD cover, it still won’t do much good considering the average Australian Mortgage is now around $450,000. So if you’re the main income earner, how’s your family going to fund the outstanding loan along with the ongoing everyday living costs?


Furthermore it is very common for industry funds to have reducing cover policies. This means that as you age, the level of cover reduces, leaving you with minimal insurance cover when you need it most, which is usually in your later years.


Another important factor to point out is industry super funds do not offer full range of personal insurance cover. Trauma insurance which provides a lump sum payment in the event of serious injury or illness is not offered through your industry super fund. This is especially important to cover any out of pocket medical expenses, which are not covered through Medicare or your private health cover.


Here at JBS we often find new client’s misunderstanding what insurance covers they have through their super funds. It is then our focus to ensure our clients understand what insurance they have through their super fund, whether they are in fact the correct types of insurance they require and determine the correct levels of insurance to implement.


Personal insurance can become very complicated and needs to be looked at in depth. Aside from determining the correct types and levels of insurance cover, there are also other factors to consider such as determining the premium structure on the insurance cover. If you haven’t had a review of your insurance needs or it’s been a while since your last review, we encourage you to get in contact with us for a chat.

Reviewing Personal Insurance

You always hear stories and advice about how important it is to have proper insurance cover, but once it’s in place often everyone sets and forgets about it.  It’s paramount that your insurance policies are reviewed on a regular basis to ensure you’re adequately covered. So how do you know when it’s time to review your insurance policies?  There are several life stages and events, which should trigger you to review your insurance policies.  Whether it be more responsibility such as starting a family, buying a house or even stressful events such as divorce and deaths of family members.  These types of events should trigger a call to action and requires you to review your insurance policies.


HouseStarting a family and/or buying a family home
Whether it be having a first child or buying your first home these are the most memorable and proud moments of your life, however often comes with additional responsibilities.  For those of you who remember to review your insurance needs, it’s often done after you’ve had kids or purchased that home.  This may leave you in a bingle as personal insurance policies can often be complicated and may require lengthy amounts of time to alter.  If bad luck strikes after the purchase of the home and your insurance policies aren’t adequate, this may potentially leave you in financial strife.  Therefore it’s a good idea to review and implement adequate insurance covers before these events.


Deaths of family members
When a close family member suffers from a medical condition, often this triggers you to think about your own morality and whether the same thing can happen to you.  This would normally be followed with thoughts of what will happen to my family if I were to suffer from the same condition?  On a lifestyle level, you might think to yourself and say I’m going to start eating healthier foods and exercising more.  The other question you should ask yourself, is do I have adequate insurance policies in place, if the same thing was to happen to me?  Again these types of events should trigger you to review your insurance needs.


Along with the above events, personal insurance covers should be reviewed but not limited to the following situations;

  • Marriages and divorce
  • Starting a family
  • Buying a house
  • New job
  • Kids enrolling in new school or completing their education
  • Illness and death in the family


If you’re unsure on whether or not to review your insurance needs, we strongly advise on picking up the phone and speaking to either your adviser or insurance representative.  There’s no harm is asking questions.


Putting in place personal insurance cover doesn’t necessarily require certain events to occur in your life.  Sometimes you may wish to protect the people around you financially.  For example you may be a 22 year old wanting to provide funds to your parents to look after you if you can’t look after yourself so you might want to look at Total & Permanent Disability (TPD) cover, or you may be a single 40 year old that needs to make sure income keeps coming in as you don’t have any other way to provide for your living expenses if you can’t work so you might consider income protection, or even a business owner that’s planning on the sale of the business to fund your retirement plans so you need insurance to make sure those plans don’t go off track somewhere along the line.


Whether it’s a certain event which occurs or you just wish to protect your family financially, personal insurance is a complicated area and needs to be looked at in depth.  Therefore it’s always strongly recommended that you visit an insurance expert such as JBS to review your circumstances and to ensure adequate insurance cover is in place for you.


Business Succession Planning

Every business with two or more owners should consider what might happen to the business if one of the owners dies, becomes totally and permanently disabled, or suffers a terminal or traumatic illness.


Businesses Succession PlanningA business generally depends on a few people to produce the profits, provide the capital, and manage the business.  If there is no viable succession plan, there may be significant financial hardship for the surviving business owner(s), as well as for the surviving family members.


Business Succession Planning is an area often neglected by successful business owners, and this lack of understanding can have dire consequences for the business and its partners.


An example of this is a business where there are two equal partners. The value of their respective shareholding is $500,000. If one partner were to die, then the business would need to find $500,000 to pay to the departing partner’s estate. There are a number of options here but most are not viable:


Borrow – May not qualify for a new loan, can the business pay the loan.

Liquidate – Not fair for the surviving business partner, selling price may be well below market value.

Sell Business Assets – These resources may be needed for the business, potential reduction in business cash flow.

Sell Personal Assets – Loss of lifestyle.

Bring in a New Partner – Who would this be?  Cost to find, time to find.  Potential control issues.

Insurance – Low cost, provides certainty.


A business succession agreement involves the business partners entering into a legally binding written agreement to plan what they are to do with their respective interests in the business should any of them die, become disabled, resign or retire.  In this respect, the agreement covers the voluntary and involuntary exit of a partner from the business.


It is vital for any business to have a succession plan in place, but perhaps particularly so for small businesses. Unless you can afford to rebuild your business from the ground up, you need to protect your business from almost any eventuality.  While you may think it may not happen to you and your business, you have to imagine how your business would fare in the event of the loss of a partner or key person – would your business survive if you didn’t have a Business Succession Agreement?


We stress that all businesses have a succession agreement in place so the business can continue to operate with minimal distraction in the event of a loss to a key person, and a funding strategy is in place for the departing business partner ensuring a smooth transition during a difficult period.


JBS can assist in this area, please give us a call to discuss further.


Having Life Insurance in Place

Life insurance is an effective way to protect your family against financial hardship if the unthinkable event happened and you pass away prematurely. Unlike other forms of insurance, such as income protection or critical illness insurance, life insurance can be put in place relatively easily depending on your health status and age.


Having appropriate life insurance policy in place, will mean your beneficiaries receive a lump sum payment to fund for everyday expenses, such as mortgage / rent, bills, childcare costs and kids’ education. The thought of losing our partner is unbearable, which makes the topic of implementing life Insuranceinsurance one we prefer to avoid however is necessary. Most Aussie families would find it difficult and almost impossible to meet daily living expenses should the main income earner pass away. This often leads to families having to move back in with relatives, increasing debt levels and even losing the family home.


Latest studies on the underinsurance issue of Australian families suggest the average household should have at least $680,000 of life insurance in place. This is because it takes into account not only debt and possibly medical costs but also lost income, even for the surviving spouse as the likelihood that you would need to take additional time on top of the obligatory 2 days bereavement leave is very high. In reality however the average household has less than half the required cover or even no insurance at all. Most Aussies believe that they have automatic insurance inside their Super Fund and this is sufficient enough. Furthermore hurdles such as having a perception of life insurance being expensive or time consuming to implement, further deters us from implementing life insurance covers.


Depending on your health and age, Life insurance is one of the most simple and cost effective types of personal insurance to put in place. It’s understandable that most of us would prefer to avoid the topic, however you do so at the risk of leaving your families without financial protection in the future. There are lots of options out there for setting up insurance; inside superannuation, through your bank, online or over the phone cover or insurance through an adviser. Any options outside seeing an adviser means that you have to determine the levels of cover and structure yourself, which is usually the part with the greatest benefit. Knowing how to calculate the level of cover required, including additional amounts if held through super and is ongoing to be paid to a non-tax beneficiary to cover tax, or making sure it’s structured right to pay the least amount of tax or even gain a tax deduction, is very important and shouldn’t be overlooked. This is more important than the product that you choose to take up.


So, before you go out and purchase life insurance, we strongly recommend you speak to an expert. Everyone has different needs for personal insurance and therefore it’s important to visit a financial adviser, like your friendly JBS team member, to discuss your own personal situation.


Insurance Inside Super

Some people hold multiple superannuation plans as they hold insurance cover. This is usually done to obtain cheaper insurance through an industry or retail fund, or due to health concerns that may affect your ability to take up new insurance.


Although this can be an effective strategy to maintain or even obtain insurance, as with most strategies there are some drawbacks. The two main drawbacks are that some funds will require you to maintain a minimum balance in order to be able to keep the insurance, and some also require ongoing contributions to be made for the cover to be held.


In some cases you will be notified of your insurance being cancelled if you do not meet Insurance Inside Supertheir criteria, however in some cases you won’t find out until it comes time to claim. In order to help prevent this from occurring, there are a few things you can do:


– Have a read of your super providers insurance Product Disclosure Statement (PDS) to see if you need to keep a minimum balance or if there is a requirement for ongoing contributions, or both

– Speak to your fund and ask for confirmation of the rules for keeping insurance, and ask for it in writing.

– Make sure you leave enough to cover the minimum balance and at least one year’s worth of insurance premiums in the fund.

– Make sure, if you are considering rolling a portion of funds out of the fund, you leave enough funds to maintain this minimum. Be careful of using the ATO rollover form (NAT 74662) as this usually initiates a full rollover and therefore you may accidentally cancel your insurance.

– You may wish to consider letting your employer contributions continue to be paid to the fund holding the insurance, as this will help to ensure the balance remains above the minimum amount and satisfies the ongoing contributions clause, where applicable.

– If you don’t want the bulk of your superannuation funds invested with that super provider, you could do a further partial rollover when the balance is large enough. Be sure to check the super funds rules again to make sure they haven’t changed with regards to the insurance. Also be careful as some funds do charge a withdrawal fee so you need to take this fee into account if you’re rolling over funds on a regular basis.


As always JBS are here to help, so if you’re ever unsure feel free to contact JBS and we can make sure you have the right strategy in place when it comes to holding insurance in super.


Personal Insurance… Do I really need it?

We are all covered by so many insurances already – WorkCover, TAC, Health insurance – it’s understandable that people would question the need for further insurance but like many things that are ‘so called free’ there are always limitations, exceptions and restrictions.

I was reading in the Herald Sun about a lady by the name of Kerryn Barnett, a mum of 3 under 11 and how she contracted an infection that has effectively meant her stomach has stopped working. She hasn’t eaten a solid piece of food since Christmas day. Her infection has seen her lose about 15kg so far, and she suffers from severe nausea, vomiting, fatigue, muscle cramping and malnutrition. Doctors don’t know how or where she contracted the infection from but it has left her and her family’s life devastated. She has had to take time off work and has had to make the difficult decision about what treatment she should peruse to try to improve her situation.
Personal Insurance
Kerryn effectively had two options (1) removal of her entire stomach and a feeding tube inserted directly into her abdomen. This would mean that no food or drink would ever pass her lips ever again, the feeding tube would need to be replaced every 6 months and she’d be prone to infection or (2) have surgery to implant effectively a pacemaker in her stomach to regulate the nerves and muscles in her stomach. She chose option two as it would seem to give her a better quality of life however as the device itself is not on the Department of Health Prostheses List, her health insurance company won’t cover it. As a general rule, health insurance companies only fund surgeries that have been approved by the state Department of Health after extensive clinical trials. With only 22 of these operations been conducted in Australia, with an 80 per cent success rate, her insurance company won’t cover the $33,000 it costs for the device itself.

Kerryn is concerned about her health but most importantly she is concerned about how she is going to fund this cost, and how she will repay it (assuming its borrowed) especially as its unknown if she will be able to work again.

Kerryn was an ordinary mum, enjoying life with her husband, her daughter (11) and twin boys (8) until she caught this infection. Her life has been turned upside down and now is the time that she is finding out about what she is or isn’t covered for with the insurances she has. Some may think this is a rare condition and it won’t happen to me? Well, think about all the rare diseases, infections, and injuries that occur in the world, they add up when you put them together. And they have to happen to someone…..

The clear message from this article is not to rely on any one form of insurance cover to fund life’s bumps.  There’s not one insurance that covers you totally for everything and therefore at least a little of all or most covers will ensure that you have a backup plan if something goes wrong along the way.

Just as an example and depending on the wording and policy taken, if Kerryn had income protection, she could have been paid an ongoing amount of funds to replace some of her income while she was unable to work. If she had trauma insurance, this may have provided a lump sum of money to allow her options to cover the medical device, or assist with child care or assist with the household bills or even allow her husband time off work to care for her.

If you want to talk more about insurances including existing covers and limitations such as WorkCover, TAC, health insurance, salary continuance, life cover in super etc, please give JBS a call or drop us an email.