What's more important; your car or you and your family's financial future
The majority of car owners will have some form of vehicle insurance whilst underinsurance in life insurance is substantial. A study conducted for the Investment and Financial Services Association (IFSA) found that 60 percent of Australian families with dependent children have insufficient life insurance cover to look after their family for a year should they die.
Of course many people think it isn't going to happen to them, yet people are realistic enough to understand that they could lose their home or car in the event of an accident, but don't seem to be able to make the jump to protecting their finances in case of death or illness.
Therefore a comprehensive financial plan should address the following insurances:
- Income protection;
- Death cover and TPD;
- Business expense cover;
- Trauma insurance;
- Health insurance, and
- Asset protection cover.
Follows is a brief overview of some of the different types of policies available. For an in-depth discussion on each type of insurance please do not hesitate to contact us at Growth Plus Wealth Management.
Income Protection Insurance
Income protection is considered one of the most important insurance covers, as it insures your greatest asset - your ability to earn an income. Not having an income will seriously jeopardise your financial plans and future. This is especially true for those who have a mortgage and loans. You can insure up to 75% of gross earnings in case you are unable to work due to accident or sickness.
The premium costs for income replacement insurance are fully tax deductible. Effectively, your premiums will be reduced by your marginal tax rate.
Death cover life insurance
Life insurance provides a lump sum amount to your estate or nominated beneficiaries in the event of your premature death. The premium paid covers the life insured for the term of the policy, with the lump sum being payable to the beneficiary in the event of death prior to the expiration of the term.
Life insurance is generally recommended to protect the value of your assets that have debt attached to them i.e. the family home with a mortgage. Another use for this policy is to provide a continuing income stream to your family or dependents.
Total & permanent disablement (TPD) insurance
TPD provides a lump sum to you in the event of your total and permanent inability to earn income. This payment is often beneficial to people who are no longer able to work as a result of an accident or medical condition.
Business expense cover
Business Expenses insurance can help you meet your ongoing business expenses while you are temporarily unable to work due to a disability.
This can help to cover your fixed business costs and keep your business afloat while you are recovering.
Business expense cover can include but are not limited to:
- rent
- principal and interest payments under a mortgage
- property rates and taxes
- electricity, telephone and other utility expenses
- cleaning and laundry
- remuneration and associated costs of non-income generating employees
- principal and interest repayments under a loan for the purpose of the business
- leasing costs of equipment or motor vehicles
- business insurance premiums
- accountancy fees
- subscriptions to professional associations
- the reasonable book value of the depreciation of plant and equipment
Trauma and critical illness insurance
Trauma cover provides a benefit upon the initial diagnosis of a specified injury or illness. This benefit is generally a lump sum payment, which can be used at your discretion. Cover is strictly limited to specific injuries and ailments. Ailments commonly covered by trauma insurance policies include heart attack, stroke, cancer and coronary artery disease.
Trauma insurance is an important consideration for anyone who doesn’t have a significant amount of extra money at call if a traumatic health condition occurred. It might suit you if you are supporting a family or if you own a business.
If you believe you do require the service of a financial planner then please feel free to contact us at Growth Plus Wealth Management on 02 9264 6733 or drop us a line at info@growthpluswealth.com.au