What Insurance Cover do you REALLY need?
Insurance is one of those necessary evils and there are a number different types of insurances available that you need to consider to see if they are right for you and your current situation.
The first one is Life Insurance, which is paid to your surviving beneficiaries when you die.
Then there is Total & Permanent Disablement Insurance, also known as TPD. There are two important definitions that you need to understand with TPD – ANY occupation and OWN occupation. For example, as an Advisor the cover that is held within my Super Fund is Death and TPD. My Super Fund also states that the TPD is defined as ANY occupation, so if I couldn’t be an Advisor however I was still capable of driving a truck, they wouldn’t pay. Whereas my TPD cover outside of my Super Fund is defined as OWN occupation. So Own Occupation would mean that if I couldn’t be an Advisor, then my insurance will pay me regardless of whether I can drive a Truck or not. So from that point of view, Own Occupation TPD is important because it protects you in your current role and it doesn’t force you to drive a truck.
Another insurance to consider is Trauma Insurance. Trauma Insurance covers you against soft tissue damage, stroke, heart attacks and cancers. Trauma Insurance can be quite expensive because the likelihood of occurrence is much greater.
Next there is Income Insurance which will replace up to 75% of your income after a defined period of time out of work. Depending on your occupation, Income Insurance can also include terms that may extend your cover out to age 65 or beyond as well as take into consideration superannuation continuance.
The last consideration is regarding how your insurance is paid out. So rather than having it directly paid to your spouse, you could consider the use of a Testamentary Trust. A Testamentary Trust can assist where you have a young family, for example 3 kids under 10. This is because under the Testamentary Trust Guidelines each child is deemed an adult and they have the capacity to earn up to $18,000 each tax free or $54,000 combined tax free. Therefore, instead of the surviving partner receiving the $54,000 and being taxed half, the children can benefit greatly.
To summarise, when it comes to insurance, having it is one thing, how it is structured is very important and the efficiency of how the proceeds come out is also a consideration. If you would like any assistance with understanding what is the right insurance cover for your situation, please contact us today.