Protecting your life and income
If you have debts or dependents, it’s important to consider how financially prepared you are for life-changing tragic events, such as the unexpected death or illness of you or your partner. How would you or your family take care of bills such as your mortgage, or day-to-day expenses if you were unable to work?
Just the same as when you insure your house and your cars, protecting your income, wealth and your lifestyle can also be managed effectively and economically.
At your first consultation, your Elder’s adviser will explain the process involved in developing and implementing an effective and relevant financial plan. They will also outline any costs or fees that may be incurred.
There are five key types of personal protection insurances, explained below:
Provides a lump sum payout on death or upon the diagnosis of a terminal illness which will lead to death within the next 12 months.
This cover helps to eliminate likely financial hardship after the death of a spouse, particularly of the primary income earner. This cover will help to pay outstanding debts, such as a mortgage, and leaves a lump sum to be invested to cover the cost of future family needs such as children’s education.
TPD provides a lump sum of money if an accident or sickness leaves you permanently unable to work. TPD can cover you if an accident or sickness results in you not being able to live independently, while providing funds for care or assistance as required.
A key benefit of TPD is that it eliminates financial hardship in the wake of being unable to work again. The money may be used to pay debts and/or leave a lump sum to replace income. TPD provides financial assistance to ensure your needs are taken care of and your family can continue to maintain their lifestyle.
Provides a lump sum payment to help you financially while you take time out to recover from a serious illness. It is designed to pay out a lump sum on diagnosis (or occurrence) of one of a list of specified serious medical conditions and procedures. Each insurance company maintains their own unique list, but they generally include serious medical conditions such as cancer, heart attack or stroke.
Provides a regular payment, generally per month in arrears. Income Protection will replace up to 75% of your usual monthly income when you are off work due to accident or sickness. Premiums paid are generally tax deductible, whilst any claim benefit received is income tax assessable. This helps to eliminate hardship and protect your family’s lifestyle by providing a replacement income should an accident or sickness strike the breadwinner.
Provides a lump sum in the event that your child is diagnosed with a specific illness (as described in the policy) or dies. This cover is usually taken in conjunction with an adult’s Trauma policy. A lump sum payment may help with medical expenses, rehabilitation, home modifications or funeral costs.
Meet Darren. Living with his wife Julie and three energetic boys, Darren never got much time to himself. But when he did he liked to swim. Or try to exhaust the family’s border collie by running on the beach.
After complaining about headaches for a month or so – which is not uncommon with three boys! – Darren decided to get them checked out. The news he was suffering from a malignant brain tumour floored him. He could barely bring himself to tell his wife Julie.
Knowing he’d taken out a life insurance policy when his eldest was born was one of the few positives running around Darren’s head. He knew the money would eliminate the mortgage. And there would be enough left over to cover the boys’ school fees, give Julie an income to live on, and take them all on a family holiday.
Because Darren had life insurance, the family received $500,000 lump sum on diagnosis of the terminal illness – meaning the family could pay Darren’s medical and palliative care costs upfront. It also gave Julie the ability to take time off work to look after Darren in his final weeks.
Meet Caroline. Caroline had travelled to the ski fields every year since she was in primary school – eventually settling on traditional skis after a brief but painful experiment with a snowboard.
But it was on skis that Caroline had her biggest fall, when a wobbly beginner crossed her path and sent her careening into a tree. A slipped disc in her lower spine was the souvenir, meaning Caroline faced up to six months off her feet.
Because she wasn’t able to perform her own occupation as a nurse, Caroline’s Income Protection Cover policy paid 75% of her income while she was off work.
With no annual leave after the holiday, and only a few days of sick leave up her sleeve, this money was crucial for Caroline. It helped her stay on top of her rent and household bills, and allowed her to ease back into work part-time. It also covered the rehabilitation she needed to get back on her feet… and into her skis.
Find out more about protecting your income and loved ones.