By MaryAnn Lee
So how can design structures protect you, your family and assets if the life plan you have in place hits a roadblock?
First step is to protect what you have or may have in the future.
On average your house and contents insurance is going to be around $120/month, car insurance about $110/month and mortgage/rental payments around $3,000/month. But how will you meet those payments if you get sick, or have an accident, and can’t work? Or suffer a traumatic event that prevents you working or receiving particular treatment you may need?
Simply arrange to have a protection plan put in place for yourself and the other most significant person in your life. Remember, the life plan is more than likely based on the assumption that you will both work to achieve the outcomes you most desire or one of you may have charge of the household so that the other can earn the big dollars.
Let’s do a few sums
Income Protection $100/month*
Total and Permanent Disablement $15/month* (outside Super and own occupation)
This equals $36.25 a week.
It certainly begs the question – Why not? Particularly when you are happy to pay $110 each month for car insurance that does not generate an income. The best option? Review your plans so everything continues to flow no matter what happens to you.
Jade and Edward married back in 2004 when they were both aged 22.
One of the wedding presents they were given was a bequest of $5,000. This was left to Jade by her grandmother.
They discussed what they should do with this money and decided to put it into an Insurance Bond knowing that in 10 years time it should at least double in value and would be tax paid in their hands. Their plan at the time was to use this for an overseas trip to celebrate their 10th wedding anniversary.
Fortunately they sat down and discussed their insurance needs as well. Their idea being that if they started early and while they were in good health, the funding of the premiums would be manageable.
Jade and Edward started their family and bought a home. They have twins – a girl and a boy for whom they have also put insurance in place.
During this time they reconsidered their options and agreed that Jade would only work part time so that she could be the primary carer and home manager. This decision also acted as a catalyst to review their protection plan and subsequently increased their previous covers to ensure that their family income and assets were protected.
Ten years on they are living very comfortably and the twins are attending a private school. Life is good.
Jade and Edward each have in place income protection, life cover and total and permanent disability (inside and outside of super) and trauma insurance.
Edward was diagnosed with cancer recently and they thought their world was about to crumble.
But then they arranged a meeting with their adviser to discuss the claim process and found their early wisdom would now pay dividends.
It was estimated that Edward’s treatment would cost around $80,000 and he would need constant care for the next six months. This could be covered by his $200,000 trauma insurance and he was also able to claim on his income protection policy that would pay a monthly benefit of $6,250 with super continuance of $594 each month.
There was another surprise the bond they had put in place 10 years ago could be accessed tax free (tax being paid inside the fund) and that now had a value of $12,000 if that was needed before their planned trip at the end of the year.
What this has meant for Jade and Edward is that Edward was able to have the best possible treatment and care and financial pressures were relieved. All he had to do was focus on his recovery.
Edward has now returned to work and his six monthly check ups have been positive.
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