Life Insurance Advice
Nobody wants to think about this, which is why most Australians are underinsured and do not know it. The cover that came with your super was chosen by someone who has never met you. Life insurance advice is about working out what would actually happen to your family’s finances if you could not work, or were not here, and making sure the answer is one you can live with
What personal insurance involves
Implementing a personal protection strategy ensures financial protection for you and your family in the event of unexpected accidents, illnesses, or loss of life.
Financial advisers will assess your situation with you and understand what it is you value and want to protect the most. This allows our advisers to establish what kind of personal protection plan best suits your individual situation.
How a personal insurance advisor can help
A comprehensive review of your personal insurance needs is undertaken in order to protect your lifestyle and assets against unforeseen and potentially financially devastating events. Advice is required to ensure your cover is appropriate when considering sums insured, policy ownership, tax of benefits and cash flow capacity. Consideration must also be given to any current and anticipated financial dependency of your children or other dependents.
Life cover
Pays a lump sum on death or terminal illness. The question is not whether to have it but how much, and the answer depends on debt, dependants, how long they would need support and what other assets exist.
Total and permanent disability cover
Pays a lump sum if illness or injury means you can never work again. The definitions matter enormously. Cover assessed against your own occupation behaves very differently to cover assessed against any occupation you could reasonably do.
Trauma or critical illness cover
Pays a lump sum on diagnosis of a specified serious condition, regardless of whether you can still work. It covers the gap that other policies leave: the cost of treatment, time off, and changes to how you live while you recover.
Income protection
Replaces a portion of your income while you are unable to work. For most working people this is the cover that matters most, and it is the one most commonly missing. If you are self employed with no sick leave, it is close to essential.
Cover inside super versus outside super
Holding cover inside superannuation preserves cash flow because premiums come from your balance. It also erodes your retirement savings, and the tax treatment of benefits differs depending on who receives them. Some cover types cannot be held inside super at all. The right answer is usually a combination.
Policy ownership and structuring
Who owns the policy determines who receives the payout and how it is taxed. Personal ownership, super fund ownership, company or trust ownership and cross ownership between business partners all produce different outcomes. See estate planning advice.
Underwriting and pre existing conditions
Insurers assess your health, occupation and pastimes before they offer cover. Existing conditions may lead to exclusions or higher premiums. This is the reason to review cover while you are healthy rather than when you start worrying, and the reason to be cautious about cancelling one policy before another is confirmed.
Speak to our experienced team today.
Life insurance advice by situation
1 – You have just taken on a mortgage
The most common trigger. The question is what happens to the loan if one income disappears.
2 – You have had your first child
Dependency changes everything about the calculation, including for a partner who is not currently earning.
3 – You are self employed with no sick leave
No employer safety net. Income protection carries most of the weight here.
4 – You have had a health diagnosis
Timing matters. Options narrow after diagnosis, and existing cover may be more valuable than it appears.
5 – Your only cover is the default cover inside super
Very common and rarely adequate. Worth checking what you actually have.
6 – Your premiums have increased sharply
Stepped premiums rise with age and can become unaffordable at exactly the point cover is hardest to replace. There are options, and some of them close with time.
7 – You are in business with someone
If a business partner dies or becomes disabled, insurance is usually what funds the buyout. This needs to align with the shareholder agreement.
8 – You have separated or divorced
Beneficiary nominations, policy ownership and the amount of cover needed all change.
Who this is for
- People with dependants, a mortgage, or an income their family relies on
- The self employed and business owners
- Anyone whose only cover is the default inside their super fund
- People whose circumstances have changed since cover was arranged
Who this isn’t for
- General insurance. We do not advise on home, contents, car or travel cover
- Health insurance. Different product, different advice
Our advice process
01 Evaluation
02 Discovery
03 Strategy
04 Implementation
05 Review
Speak to our experienced team today.
Life insurance FAQs
How much life insurance do I actually need?
Enough to cover what would otherwise fall on your family: outstanding debt, the income they rely on, the cost of raising children to independence, and any specific commitments such as education. From that, subtract what you already have, including existing cover inside superannuation and other assets that could be used. The result is different for everyone and changes as your debt reduces and your children grow, which is why cover set once and never reviewed is usually wrong in one direction or the other.
Is the insurance in my super enough?
For most people with dependants or a mortgage, no. Default cover is set at a level chosen for the fund’s membership generally, not for your circumstances. The definitions attached to disability cover inside super can also be narrower than those available outside it. The convenience is real, since premiums come from your balance rather than your income, but it also means the cover erodes your retirement savings quietly over decades.
What is the difference between TPD, trauma and income protection?
They cover different events. Total and permanent disability cover pays a lump sum if you can never work again. Trauma cover pays a lump sum on diagnosis of a specified serious condition, whether or not you can still work. Income protection replaces part of your income while you are temporarily unable to work, and then stops when you return. Many people need a combination, because each leaves a gap the others fill.
Should I hold my life insurance inside or outside super?
Often a combination works best. Holding cover inside superannuation preserves your cash flow because premiums come from your balance, but it reduces your retirement savings and the tax treatment of benefits depends on who receives them. Some cover types cannot be held inside super at all, and some definitions are more restrictive there. Outside super gives more flexibility and choice of definitions, at the cost of paying premiums from your income.
Will a pre existing condition stop me getting cover?
Not necessarily, but it will affect the outcome. Insurers assess your health, occupation and pastimes before offering cover, and an existing condition may result in a specific exclusion, a higher premium, or in some cases a decline. This is the reason to review your cover while you are well rather than when you begin to worry, and the reason not to cancel an existing policy until replacement cover is confirmed in writing.
Who receives the payout if I die?
It depends on who owns the policy and who is nominated. A policy held personally generally pays to the nominated beneficiary, or to your estate if there is no nomination, in which case it is distributed according to your will. A policy held inside superannuation follows the fund’s rules and your death benefit nomination, not your will. Getting these to agree with your estate plan is straightforward, but only if someone checks.
Why have my premiums gone up?
Most likely because your policy has stepped premiums, which increase each year as you get older. This is normal and expected, but the increases become steep in later years, sometimes at the point when the cover is hardest to replace. Premiums can also rise if the insurer has repriced the product, or if your sum insured is indexed to keep pace with inflation. If affordability is becoming an issue, there are options, and some of them narrow with time.