Not all insurance covers are perceived in the same light
The majority of Australians hold some form of insurance whether it be home and contents, motor vehicle or private health cover. However when it comes to insuring themselves for death, sickness, disability or loss of income, people are reluctant to outlay their hard earned cash.
“Personally knowing that my family will not be left with excessive debts or the burden of finding a way to fund their lifestyle, given a long-term health condition provides me peace of mind,” says RSM Financial Planner, Daniel Cundy. “I do not want to worry about what would happen to my family financially if I could not earn an income.”
The Federal Government commissioned Throwbridge Report, highlighted that many Australians either have no or insufficient insurance to protect themselves and their families. Daniel says, “Many clients are initially concerned with the cost of obtaining personal insurance. However obtaining cover does not necessarily mean that you need to pay the entire premiums from your cash flow. Life and some forms of disability cover can be held within superannuation.”
Holding the cover within super will mean that the premiums are funded by either your personal or employer contributions, an added benefit is that these premiums are eligible for a 15% rebate, therefore premiums of $1,000 only require $850 to be paid via your current super monies.
Income Protection insurance, which pays a monthly benefit in the event that you are unable to work due to illness or injury, is tax deductable, so if the premium for income protection cover, is a $1,000, then you can claim the full amount as a tax deduction against your annual return.
The complexity of some insurance products can be daunting and there are certainly traps and pitfalls to consider when setting up or replacing cover. Daniel says, “It’s important to seek personal advice and speak with a financial planner and accountant to ensure that you are adequately covered and that insurance policies are structured correctly”.
This presentation article has been prepared by RSM Financial Services Australia Pty Ltd ABN 22 009 176 354, AFS Licence 238282. This article does not take into account your individual objectives, financial situation or needs. You should assess whether the information is appropriate for you and consider talking to a financial adviser before making an investment decision.