Life insurance protects your family by paying a lump sum if you die. Most people think...
Trauma (or critical illness) insurance provides a cash lump sum if you suffer a specified illness or...
Income protection insurance (salary continuance or income replacement) provides...
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What is insurance?
Insurance is a form of protection – a way to protect yourself, your family, your business and the things you own if something goes wrong. It enables you to replace or repair your assets, whether those assets are your belongings or your capacity to earn income.
Everybody’s circumstances are different, but insurance is important for everybody.
Your need for insurance will change as you move through the different stages of your life. There are many different types of insurance, and we can help you find the right level of protection for your needs.
The amount of insurance you need is affected by:
how much you earn
your cost of living
your relationship status (whether you are married, in a de facto relationship or single)
how many dependants you have.
While insurance doesn’t remove the risk of something going wrong, it provides you and your family with protection and financial security if something does happen.
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Life insurance protects your family by paying a lump sum if you die. Most people think that life insurance is only for the main income earner, but the person who takes care of the family is also a large contributor to the home and can be insured.
Many super funds provide life insurance. Premiums can be paid from contributions made to your fund by your employer, by you personally or simply deducted from your account balance in the fund.
TPD cover provides a lump sum payment if you suffer a disability before retirement and can’t work again, or can’t work in your usual occupation or chosen field of employment.
You can buy TPD as an add on to term life insurance, or as a stand alone product. You can also get TPD as an extra benefit from your super fund or as part of a trauma insurance product.
Trauma (or critical illness) insurance provides a cash lump sum if you suffer a specified illness or injury. Advances in medical treatment have increased the need for trauma insurance. The improved chance of survival means that although you are more likely to survive, you are also more likely to have substantial medical bills to pay.
Trauma insurance is usually purchased as a stand alone policy, but can be purchased with additional options, such as a TPD benefit. Trauma insurance is generally not available through superannuation.
Income protection insurance (also known as salary continuance or income replacement) provides a monthly payment to replace lost income if you are unable to work due to injury or sickness.
The maximum allowable cover is generally 75 per cent of your gross wage. Payable for a specified benefit period. The longer the benefit period, the higher the premium. Income protection is available through your super fund or can be purchased as a stand alone policy outside of super.
Life, TPD and income protection insurances are all offered within superannuation. If your insurance is held within superannuation, the cost of the premiums is withdrawn from your superannuation balance. It is important to work out the best way to structure your insurance, whether inside or outside superannuation, or a combination of the two. (These options are best looked over as part of a complete in-house assessment as to what is the best option for your circumstances.)
Benefits to having insurance in your superannuation may include (but not always include):
automatic acceptance – there’s generally no need to complete medical checks
cheaper cover – from the bulk discount typically available to superannuation funds, and
tax deductibility – some contributions to superannuation attract a tax deduction, so you may be able to pay your premiums by making tax deductible super contributions.
Disadvantages of having insurance in your superannuation include:
limitations on the types of cover available
potential delays in the payment of benefits in the event of death, and
high tax rates – superannuation death benefits paid to a non-dependant may be taxed at up to 32 per cent.
Your privacy is important to us and Australian Financial Services Licensee, which is part of AMP. You may request access to your personal information at any time by calling us on (07) 4639 1399 or contacting AMP on 1300 157 173.