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Life Insurance

Most people know that it is important to ensure you have the right protection in place. We insure our home and car, yet 95% of Australians do not have adequate Life Insurance cover.

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Could you afford to maintain your lifestyle if you couldn't work?

How would your family or partner cope in the unfortunate event of your death, injury or illness?

Will they be able to afford their day-to-day living expenses and pay off any debt?

What will happen to all of your future plans and goals?

 

What is Life Insurance?
Life insurance provides the financial means to preserve your way of life, or that of your family, in the event of an accident, serious illness or even death.

We don’t like to think about ‘worst case scenarios’ but taking some time to consider the risks and having a contingency plan is like carrying an umbrella – it can’t stop the rain but can provide much needed financial protection during life’s storms.

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Types of Life Insurance
Although people generally think of Life Insurance as just that – insurance which covers your life in the event of death, but there are actually several types of Life Insurance policies:

1. Term Life Insurance – pays a lump sum on your death or the diagnosis of a terminal illness. So when the worst happens, your foresight will pay off the mortgage and other debts, provide for your children’s education, obtain child care and secure your family’s lifestyle. This will allow your family to focus on supporting each other, not worrying about paying the bills. As the years pass they will continue to be thankful you thought ahead.

2. Total & Permanent Disability Insurance – pays a lump sum if you become disabled and are unable to ever work again. You can use this lump sum to pay off debts, cover medical costs and invest so that you have an annual income to help maintain your lifestyle.

3. Trauma Insurance (Critical Illness Insurance) – pays a lump sum on the diagnosis or occurrence of one of a list of specific illnesses such as heart attack, cancer or stroke. That payment gives you choice and flexibility at a time when you need it most. You will be able to reduce your working hours, spend time with your family, get treatment or rehabilitation and pay for a carer and any number of unexpected things.

4. Income Protection Insurance – provides a replacement income of up to 75% of your current income if you are unable to work due to illness or injury. Also known as ‘Income Replacement Insurance’, ‘Disability Income Insurance’ or ‘Salary Continuance Insurance’, it can cover you for short or long periods and offer various waiting periods to suit your needs. Depending on the policy, payments may continue right up to the age of 65 if the disability is ongoing or permanent.

5. Business Expenses Insurance – Business Expenses insurance covers the ongoing costs of your business if you are self employed and cannot work due to illness or injury.

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Do I need Life Insurance cover?
Life Insurance gives you the financial strength to support you or your family through their most difficult times. During your lifetime, there is a pretty good chance that you will need a hand at some stage:

  • 50,000 Australians have heart attacks every year.1

  • One third of women and a quarter of all men will suffer cancer at some stage in their lifetime – over 60% of whom will live for longer than five years after diagnosis.2

  • More than 43,000 people are expected to die from cancer in 2010.3

  • Half of all men and a third of women will be diagnosed with cancer before the age of 85.4

  • Over 1,600 people die on Australian roads every year, most aged 26 - 59 years.5

  • One stroke event occurs in Australia every 12 minutes.6

  • Just under half the population with an arthritis-associated disability are aged 15-64.7

  • With symptoms generally developing between ages 20-40, Multiple Sclerosis is the most common chronic central nervous system condition among young Australian adults.8

Having the right level of life insurance cover in place allows you to:

  • Preserve your and your family’s lifestyle – Life Insurance enables you to continue to make mortgage, rent and other payments and can help you to pay off debt. More than this, it empowers you to keep on doing everyday things such as spending precious time with family and enjoying the other things you love.
  • Stay in control and enjoy freedom of choice – some of the biggest benefits of Life Insurance cannot be seen and touched. Having sufficient funds to be in control during difficult times and having the freedom to choose treatment and lifestyle options are priceless.
  • Reduce stress and take better care of yourself – suffering from a serious illness or overcoming the death of a family member can be made even more stressful if you’re struggling to meet your financial commitments. Life insurance can reduce your stress so you can focus on your emotional or physical recovery.

1 Heart Foundation, Australian Facts 2004: Heart, Strokes and Vascular diseases 2004)
2 Cancer Council: (www.cancer.org.au), Cancer in Australia: an overview, 2008 Australian Institute of Health and Welfare (published December 2008)
3 Cancer Council: (www.cancer.org.au), Cancer in Australia: an overview, 2008 Australian Institute of Health and Welfare (published December 2008)
4 Cancer Council: (www.cancer.org.au), Cancer in Australia: an overview, 2008 Australian Institute of Health and Welfare (published December 2008)
5 Australian Government, Road Deaths Australia 2007
6 Australia’s Health 2008, Australian Institute of Health and Welfare, June 2008, ING Life
7 ‘Australia’s health 2008’ Australian Institute of Health and Welfare, June 2008
8 ’Multiple Sclerosis – a $2 billion disease in Australia’ Media release by MS Australia, www.mssociety.com.au


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Don't I already have Insurance?

There is a good chance you already have at least a minimal amount of cover, and it’s important to know exactly what that is. In doing so you may discover that you have a serious shortfall, already well covered, or have too much cover. What’s important is getting the right type and amount of cover and ensuring that suitable to your needs.

Here are two simple steps you can take:

1. Check your super fund
Most Australians have at least one Super fund and, by law, Super fund trustees must provide a minimum level of automatic insurance cover for members. Premiums are normally deducted from your Super balance.

The first step you should take therefore is to check with your super fund(s) and see what cover you may have in place. But remember the level of cover automatically provided to members is unlikely to be exactly what you and your family need. Don’t worry though, it may be quite easy to adjust your level of cover so that it is more appropriate for your needs.

If you have more than one super fund and have Life Insurance with each of them, it might be worth thinking about consolidating the funds into one. Keep in mind that you will lose your insurance cover in any funds that you roll over, which is why obtaining the right advice prior to making a desicion is critical.

2. Check with your employer
Some employers have insurance in place for all of their staff, either through their Super fund or through a separate stand alone insurance scheme. This means that your second step should be to talk to your employer about whether they have any insurance in place.


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How much and what types of Insurance do I need?
This can be a very difficult question to answer. As your financial commitments and obligations, lifestyle and needs change, the types and amount of cover you need can vary, which is why it is critical that you obtain expert advice. Contact us, and your PlanSmart Adviser will help analyse your insurance needs to ensure that you have the right protection in place.


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PlanSmart Pty Ltd (ABN 15 142 298 208) Authorised Representative (No. 345551) of
Synchronised Business Services Pty Ltd T/as Synchron ABN 33 007 207 650
Australian Financial Services License No. 243313

Disclaimer: The information contained within the website is of a general nature only. Whilst every care has been taken to ensure the accuracy of the material, PlanSmart Pty Ltd will not bear responsibility or liability for any action taken by any person, persons or organisation on the purported basis of information contained herein. Without limiting the generality of the foregoing, no person, persons or organisation should invest monies or take action on reliance of the material contained herein but instead should seek advice or satisfy themselves independently of the appropriateness of such action.