A significant number of working Australians remain under-insured or even worse, totally uninsured. Either way, this can have dire consequences for families in the unfortunate event of a family member passing away, having a serious injury or illness, or some other unforeseen income-impacting event occurring.
While it's common for taxpayers to do some end of financial year tax planning, review their superannuation and other financial affairs, the lead-up to 30 June is also a good time to re-think your personal insurance arrangements.
Reviewing insurance is not an easy task, so our Financial and Risk Insurance Advisers can help you work through the process. If you have questions about personal insurance cover, feel free to contact Pat Kelly or Jenny Kitching at The Peak Partnership.
Here are five key points to consider about insurance to protect yourself and your family:
- Type and scope of current policies – is the insurance you hold still suitable to your circumstances?
As life changes and our family expands, we take on more debt, buy a new home – or reduce debt by paying off loans – our needs for insurance change. The types of policies we have, the current levels of insurance, the premiums we are paying, and policy terms and conditions, should all be reviewed from time to time.
End of financial year is a good time to have a personal insurance ‘audit’ carried out to ensure that the cover you have is appropriate for your family’s circumstances.
- Insurance ownership – many people have their insurances attached to their superannuation. This may be appropriate, however, there are times when holding insurance through super may not be the best option. By reviewing the way in which your policies are structured, we can ensure that in the event of a claim, the tax consequences are minimised.
- Do you hold insurance through your super? Recent changes to legislation may result in your insurance cover being cancelled under certain circumstances, if you don’t take the required action. In general terms, if your super account is inactive (ie. a contribution or rollover is not made within the past 16 months) or if your super account balance falls below $6,000 your insurance will be cancelled.
However, you may retain your insurance by either making a contribution to your super fund, or by making an election to retain your insurance.
- Nominated beneficiaries – many insurance policies (other than those held through super) enable you to directly nominate a beneficiary to receive the benefits in the event of a claim arising.
Nominating appropriate beneficiaries can be extremely useful as the insurance proceeds are paid directly to that person and do not form a part of your estate, to be dealt with under your Will. However, death benefit nominations need to be reviewed from time-to-time to ensure they remain appropriate. If you don’t have a death benefit nomination in place, it is something worth considering.
- Insurance bonds – with increasing restrictions affecting the amount that may be contributed to super, insurance bonds provide a great opportunity to save in a concessionally-taxed environment, without many of the restrictions applied to super. Insurance bonds have been available for decades, however, there has been a resurgence of interest as a result of the government changes to super rules.
Modern bonds offer a wide range of investment options that allow you to invest in a manner that suits your personal investment goals and objectives. If you would like to see how investing in insurance bonds might suit your needs, please talk to us.
Having properly structured, affordable, and adequate insurance cover ensures that, in the event of death, disablement, temporary incapacity, or a critical illness diagnosis, your family is being provided for financially.
If you have questions, or if you'd like us to review any aspect of your insurances to check that everything is on track, feel free to contact Pat Kelly or Jenny Kitching at The Peak Partnership to take the next steps.