Tag Archives: Insurance

Problem with Direct Life Insurance

In August of last year, ASIC completed a review of the direct life insurance industry and revealed some startling statistics in their report (Report 587).

 

Direct Life Insurance is defined as being sold to consumers by insurers or their sales partners, by outbound telemarketing, inbound phone calls from consumers, online or face to face (through bank branches). These products are sold with general advice or no advice given meaning that the consumer’s circumstances are not taken into account.

 

The report revealed that:

– 1 in 5 of all policies taken out were cancelled in the cooling off period

– 1 in 4 of all policies that remained in force beyond the cooling off period were cancelled within 12 months

– 3 in 5 of all policies sold were cancelled within three years

– 15% of claims from direct life insurance are declined and 27% of claims are withdrawn

 

The average declination of claims across the entire industry is 7%, less than half of that compared to direct cover.

 

ASIC believe that these high rates of cancellations and claim declines is due to consumers being sold products they don’t want, can’t afford, or don’t perform as expected.

 

ASIC also found that consumers struggled with the sales experience and complexity of the products, and consumer understanding of key features is often poor. ASIC identified a failure by the salespeople to provide adequate information about important aspects of the cover, including key exclusions and future premium increases. It is hypothesised that this lack of understanding about the product resulted in the high cancellation and claim declines.

 

A 2015 report, Underinsurance in Australia, with data compiled by Rice Warner revealed that that median level of:

– Life insurance meets 61 per cent of basic needs

– Total and permanent disability insurance meets just 12 per cent of basic needs; and

– Income protection cover meets just 16 per cent basic needs

 

So not only are people cancelling their covers early, even if they do hold the policies for a long time, the insured amount is often quite low compared to what they require.

 

At JBS we know that insurance can be complex with often slight differences between policies, but you do not have to try and organise it on your own. As well as selecting the best product for you, we can also help determine the appropriate amount of cover required ensuring that all of our clients are properly insured to protect themselves and their families. Finally, in the event of a claim, we will also be there guiding you through the process making everything as painless as possible.

 

If you are worried about your insurance levels but are too scared or time poor to go at it alone and would rather seek the help of a professional, please contact our offices at 03 8677 0688.

 

– Liam Rutty –


Insurance Premium Structures

Life insurers will generally offer you the choice to have either Level or Stepped premiums, or a combination on their policies. The type of insurance premium structure you choose will affect the initial cost as well as the total cover over the life of the policy. Generally speaking the duration of the cover may help to determine the appropriate premium structure you should use.

 

Stepped Premiums – Stepped premiums increase as you age, reflecting the higher likelihood of a potential claim. Stepped premiums have a lower upfront cost over the short-term (when compared to Level premiums), however as you age, the Stepped premiums start to increase, and the longer it is held, the more significant the increase becomes. Therefore, if you plan to hold the level of cover for a long period, generally greater than 10 years, it may be more beneficial to take-up a Level premium.

 

Level Premiums – Level premiums can provide you with peace of mind as they are designed to remain stable. The premiums will remain stable from the policy commencement until you reach a predetermined age (e.g. age 55 or 65), at this point the premiums will switch to a Stepped premium. Level premiums can still increase due to indexation or other increases to the sum insured. Level premiums can also change if the underlying assumptions and/or expenses of the insurer have changed since the policy started – however this will generally affect the stepped premiums as well.

 

At the beginning of the policy, Level premiums generally have the higher upfront costs when compared to Stepped premiums. This is due to the increased risk of claim as the insured person ages have already been factored in.

 

Hybrids Premiums – Some insurers may provide you with the option of a hybrid premium structure that allows you to use Stepped premiums for a portion of the cover, together with Level premiums for the remainder of the cover. This allows the premium structure to be aligned to short-term or long-term needs within a single policy.

 

From the beginning it’s important that you implement the correct cover and policy structure, as replacement policies can result in Level premiums being calculated based on your age at the time of amendment. If you take out new cover later on, you may also have to undergo medical tests and the like, which could result in the possibility of loadings or exclusions being applied to your policy, if you end up changing. This could result in your new cover becoming more costly or even unattainable and therefore effectively locking you into your current cover with the incorrect policy structure and/or cover.

 

JBS can assist you with all your personal insurance needs and can help determine the right level of cover for you and assess which premium structure is more suitable for your needs.


Protecting Your Earning Capacity

In previous articles, we have written about the importance of ensuring that your biggest asset – your earnings capacity is protected.

 

A question we often get however is how do I know if what I have is ok?

 

There are many Income Protection policies on offer with many options but one of the biggest differences you need to understand what happens in the event of a claim with an Agreed Value Policy compared with an Indemnity Policy. The wrong option can have catastrophic consequences to your financial position when you need the cover the most.

 

In order to make the right choice, you must first understand the differences between these two options.

 

An Agreed Value Policy is signed off at the start, i.e. what level of income they’re willing to cover. It provides you with certainty at the time of insurance application, the amount that you have been insured for will be paid, if you need it.

 

Whereas with an Indemnity Policy, the benefit amount is estimated at the start but not financially assessed until the time of claim.

 

In both instances, you generally are able to insure up to 75% of your income, but the difference in the event of claim can be significant.

 

So which one is advantageous for you?

 

Indemnity Value Policies are usually cheaper when compared to Agreed Value. However, there is no certainty on the monthly benefits received upon the claim. Although Agreed Value income protection might be a little more expensive, it holds more value as it provides you with certainty on the benefit amount you will receive.

 

Indemnity value covers are suitable for people with a steady income over the years. However, it is quite common for things to change which may lead to the decline (sometimes only short term) of your income.

 

Possible reasons for a decline in income (which would impact on an indemnity claim but not an agreed value claim):

 

– You may be in a stable employment now but have you ever dreamt about starting your own business? Clearly, the goal would be to return to a similar or high income but this move can often lead to a short-term income drop and provide an exposure.

– You may wish to change your career entirely. This could involve further study and again a reduced income for a period of time.

– Your current industry or expertise may be subject to disruption which could affect your earning capacity or require further study.

– You may wish to reduce your working hours or start a family.

– You may have your hand forced and need to give up your career or dramatically alter your hours if a family member becomes very ill.

 

Unfortunately, one of the most tragic situations we have seen was with a middle-aged man who overtime had his work hours, job performance and income gradually get affected as a result of a debilitating mental health illness. The illness caused him to have to reduce his hours and responsibility and even take periods of unpaid leave. Rather than going on a claim in the initial stages, he struggled through perhaps in denial. The gradual decline in health eventually resulted in a claim; however, the claim was reduced as his pre-disablement income was actually lower than what it was when he took the policy out. Had he taken out an Agreed Value Policy, he would have been entitled to a higher level of income which would have provided much more financial support to him and his family and would have allowed him to focus on his recovery.

 

For anyone who has default Income Protection cover through work or a Superannuation provider, it is critical to understand these differences as often default insurance is on an Indemnity Policy basis.

 

It is also important to understand that the older we get the more “uninsurable we become” so locking in a good policy now while you are young and healthy can make a significant difference when you need the policy the most.

 

At JBS we help people assess their need for cover every day. We provide clients with piece of mind which allows them to get on with their lives in comfort knowing that they are covered. Please contact us so that we can provide you with the same level of comfort.


What personal insurance does an everyday Australian have?

As long as you’re an Australian resident, you will have some form of personal insurance through Government agencies and bodies such as Centrelink, TAC and WorkCover. Often when asked about personal insurance cover, most people would simply suggest they have automatic cover through Work and their superannuation funds. There are several main concerns here. Firstly there are many misconceptions about what types of covers are offered by government organisations. For instance workcover will only cover you if you get injured at work and not if you injure yourself during out of work hours. Secondly people misunderstand the conditions which needs to be met before the insurance companies accept the claim. Lastly the cover amount may not be sufficient. For example work cover will only cover death for up to the maximum amount of $611,430 per person, which wouldn’t be sufficient if that person happens to have $700,000 of debt.

 

Let’s firstly have a look at the disability pension through Centrelink. To be eligible you must firstly be between ages 16 to pension age, pass the residency requirements and meet the income / asset test. Once you’ve met all these conditions your disability will then be assessed. To meet the disability requirement, you must be either permanently blind or assessed to be physically / mentally impaired and unable to work for more than 15 hours or more per week for the next 2 years. Furthermore you may be required to participate in support programs going forward. In other words your disability or condition must be very severe and permanent for you to receive support from Centrelink. Then there’s the NDIS (National Disability Insurance Scheme), which again is run by the government for anyone who suffers permanent disability such as permanent blindness, Down syndrome and autism. The biggest misconception regarding what the NDIS offers is the fact that NDIS does not offer monetary support, but rather provides aids and equipment to anyone who is eligible.

 

Now let’s have a look at the covers offered through WorkCover and TAC. Workcover provides insurance cover for all working Victorians. Each state has their own body, which operate similarly. Both WorkCover and TAC operate on a no fault policy meaning you will be covered at work or on the roads, even if it’s your fault that led to your injury / disability. The main consideration here is that you have to be either at work or on the roads, at the time of the incident. Furthermore it’s important to note that there are limits on how much WorkCover and TAC will payout in the event of death, total disablement and income supplement.

 

The last type of insurance we will look at is the default cover offered by our superannuation companies. For those of us who have super accounts will also have personal insurance cover attached. There are generally 3 types of insurance offered by industry super funds. Death / TPD or Income Protection. Depending on your super fund you may either have all 3, just one of them or none. Although generally more cheaper to fund, it’s important to point out that default insurance through super funds are very general and will most likely be on reduced cover, meaning the amount insured will reduce over time. This is exactly what you don’t want considering as we get older the chances of us claiming on insurance increases, whilst on the other hand the default cover is reducing on an annual basis.

 

So here’s a question. If you suffered a heart attack or stroke and required large sums of money for treatment, which of the above insurance covers will pay? The answer is none of them. Overall most of us will have access to some form of default personal insurance. It’s important to understand that these default covers in most cases will not provide you with adequate cover. Having a personalised insurance policy is crucial as it will provide you with customised insurance cover to meet your specific needs.

 

If you are unsure about what insurance you currently have or would like to review your insurance, please get in touch with the team at JBS to ensure you have the right cover in place.

 


Protecting Our Future Plans

Planning for the future is essential to financial planning. Having money now is great but it’s having money 5, 10, 15 years from now that really counts when it comes to financial planning.

 

So a plan is developed using appropriate strategies providing you with money in the future enabling you to achieve your goals. However, what if things go wrong? What if something happens where you are not able to achieve your future goals? No, I’m not talking about investment returns.

 

When planning and saving for the future, your income, expense and savings levels are critical. They are the main things that will determine how much money you will have in the future. So what happens if your income all of sudden stops? Or if you have a large one off expenses that depletes your savings and may even put you into debt?

 

Did you know:

 

Potential injuries, illnesses and even death can significantly hinder our ability to reach our goals and may even make them impossible. Our human thinking of “It will never happen to me” just doesn’t cut it when you look at the above stats. Accidents happen and cancer does not discriminate but there is something that we can do to minimise the impact. Life Insurance.

 

There are 4 kinds of Life Insurance each providing cover under different circumstances:

 

Death Cover – As the name suggests, this provides a lump sum amount to your beneficiaries when you die.

 

Total & Permanent Disability (TPD) Insurance – As the statistics show, we don’t always die but we can have serious injuries that stop us from working. TPD cover provides a lump sum payment if we are permanently unable to work due to illness or injury such as what may happen if for example we are in a serious car accident.

 

Income Protection – This provides you with a regular income if you are unable to work due to illness or injury.

 

Trauma insurance – Also known as critical illness insurance provides you with a lump sum if you suffer a critical illness for example cancer or a heart attack. The lump sum can be used to help fund medical expenses, payout your loans or whatever it is that you require at that time.

 

Planning for the future is important but those plans can go straight out the window if something devastating like a serious health issue happen to us. While we cannot protect against the emotional, mental and physical consequences of something happening we can protect against the financial aspects using a combination of insurance policies protecting us against death, illness and injury. Insurance however is complicated and there are differences between the policies offered by insurers. To ensure that you not only have the correct amounts of insurance in place but also the right insurance policy for you please contact the JBS office on 03 8677 0688.

 

*2002 Report of the Disability Committee, IAA
**AIHW (2008) Cancer in Australia: an overview 2008
***Access Economics Pty Limited (April 2007) Cost of Cancer in NSW, Report for The Cancer Council NSW.
^’National Road Safety Strategy 2011-2020’ – Australian Transport Council, May 2011

 

– Liam Rutty –


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.

 

Protection

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.


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