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Mitigation

“While many Aussies and immigrants embrace our happy-go-lucky approach, we have to admit that it doesn’t always put us in the best position to protect our families from the risks that exist in this unpredictable world.”

Personal Insurance

“She’ll be right, mate.”

It’s part of our culture, and we’re known for it the world over. While many Aussies and immigrants embrace our happy-go-lucky approach, we have to admit that it doesn’t always put us in the best position to protect our families from the risks that exist in this unpredictable world.   

Personal insurance is a key element in expecting the unexpected, and planning for it. A competent financial adviser will make this less overwhelming for you and help to identify your needs and objectives, tailoring any recommendations to your unique story. 

Term Life Insurance

Term Life Insurance is there to provide financially in case the unthinkable should happen. Upon the death of the life insured, unless by suicide within the first 13 months of the policy, the beneficiary/ies can receive a lump sum payment which might be used to extinguish debt, provide for income replacement, education expenses and so forth. If the life insured is diagnosed as terminally ill and is likely to pass away within a certain period, usually 24 months, the lump sum may be paid prior to death. 

Total & Permanent Disability (TPD) Insurance

As the name suggests, this type of insurance pays out when a person becomes totally and permanently disabled. The definitions vary from one insurer to the next but generally speaking, the insured person is assessed against their ability to perform the usual duties of the following:

  • Your own occupation, or
  • Any occupation by which you are qualified by reason of education, training or experience, or
  • Any other meaningful paid or unpaid work.

A claim may also be paid in the event of certain disabling conditions occurring, such as the loss of sight of two eyes, or the loss of use of two limbs.

Trauma Insurance

Also known as Crisis, Living Recovery or Critical Illness Insurance, this type of cover aims to protect you in the event that you suffer a specified illness or medical condition such as heart attack, stroke or cancer.

Income Protection Insurance

It is often said that your ability to earn an income is your greatest asset. So what happens when an injury or illness interferes with that? 

Income Protection Insurance is designed to replace income lost as a result of illness or injury and pays an ongoing monthly benefit. The waiting period before benefits becomes payable and the time period that they may continue being paid varies between different policies on offer.

The cover amount is usually limited to 70% of a person’s salary, or in the case of self-employed persons, their gainfully earned taxable income. In some situations a lesser benefit may be payable if you’re only partially disabled. For example, if you could return to work, but only for a limited time each week.

Business Expense Insurance

The big what-if for self-employed individuals. ‘What if I am not able to generate revenue in my business if I get sick or if I am injured?’

Business Expenses Insurance is available for such entrepreneurs who wish to cover their fixed business expenses in the event of illness or injury, helping keep their business up and running and reducing the worry that inevitably hangs over a responsible business owner. 

Payments are generally made on a monthly basis and can reimburse up to 100% of approved business expenses. The payments are generally limited to six or twelve months.

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Fun Fact

Around 600 BC, the Greeks and Romans formed the first types of life and health insurance with their benevolent societies.

“An astute business owner sees the value of expert guidance to ensure all vital factors are considered and everything is thoroughly documented.”

Business Insurance

Key person solutions


What is Key Person Insurance?

Key Person Insurance is cover that is designed to provide capital to a business following the loss of an important or “key person”, which, may in turn, cause a loss of income or even capital to the business. In most cases the key person’s ongoing contribution to the business will cease if he or she were to suffer a total and permanent disability or medical crisis, and naturally if he or she were to pass away. The policies are owned by the business, not the life insured or any of their family members.

 

Is Key Person Insurance tax deductible?

As stipulated by the Australian Taxation Office (ATO), the answer to this question lies in the purpose of the insurance. 

  • Revenue Protection – the insurance premiums are tax deductible, but any claim proceeds are assessed as income and are therefore taxable.
  • Capital Protection – the insurance premiums are not tax deductible, and any claim proceeds are not treated as assessable income. However, Capital Gains Tax (CGT) may apply. 

An astute business owner sees the value of expert guidance to ensure all vital factors are considered and everything is thoroughly documented.

Business succession solutions

When an unexpected “trigger” event occurs in a co-owned business or partnership, resulting in a principal’s unplanned departure, the wise business owner is a step ahead with mechanisms in place to prevent a crisis.

“By failing to prepare, you’re preparing to fail.” – Benjamin Franklin 

A common and cost-effective option is known as Buy/Sell Insurance.

 

What is Buy/Sell Insurance?

When one of the partners is no longer able to continue in the business due to permanent disability, critical illness or death, the remaining owners will need to have the departing individual’s interest in the business transferred to them. However, the business partner who suffered the unexpected event will need to be compensated for their share – and this may include their surviving family members in many cases where a death has occurred.  Buy/Sell Insurance is put in place to raise the capital needed when a situation like this arises. 

However, there is far more to it than just putting the policies in place. 

Succession planning professionals know the ins and outs of the many structures available and can identify what is best suited to your unique needs as an entrepreneur, whether it’s ownership via a trust, company, super fund or directly by the business partners, and the related tax implications. They can guide you through the legalities and formal agreements that are critical to have in place, while collaborating with your accountant and lawyer. As time passes, they assist you through the process of regularly reviewing the policies to ensure that the changing circumstances of the business are always considered.

They can guide you through the legalities and formal agreements that are critical to have in place, while collaborating with your accountant and lawyer. As time passes, they assist you through the process of regularly reviewing the policies to ensure that the changing circumstances of the business are always considered.

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“The series of strategies you personally implement to ensure your assets are distributed to the right people according to your wishes when you pass away.”

Estate Planning

What is Estate Planning?

Simply put, Estate Planning is the series of strategies you personally implement to ensure your assets are distributed to the right people according to your wishes when you pass away.

Planning to pass your wealth on to the next generation is best done early, ideally at the beginning of your wealth creation process.

Is it all about preparing a Will?

Having a valid Will is certainly an essential component and absolutely should be a top priority. 

However, holistic Estate Planning is far more than that.  Many assets that you control will not even form part of your estate.  With that in mind, a good estate plan will:

  • Ensure that ownership and control of your assets passes to the intended beneficiaries in the correct proportions,
  • Utilize smart tax planning strategies to minimize income and capital gains tax, 
  • Protects those assets should a beneficiary be involved in any legal difficulties e.g. bankruptcy or a divorce, and
  • Ensure that your loved ones are well looked after and your affairs are settled according to your wishes, should anything happen to you.

Issues that we believe you should consider when preparing your Will, and other areas within Estate Planning, are mentioned below. 

Will – It is important to regularly review your Will (at least every three years) to ensure that it continues to reflect your wishes.

Living Will (Advance Care Directive, Advance Health Directive) – If you face a situation where you are no longer able to express your own wishes regarding medical treatment and care, having a Living Will in place can give you and your loved ones peace of mind knowing that your choices are honoured. 

Enduring Powers of Attorney – Consider nominating someone you trust to make financial and/or legal decisions on your behalf, even if you become mentally incapacitated. 

Binding Death Benefit Nominations – This type of nomination is binding on the trustee of the superannuation fund so long as it is valid at the date of a person’s death and can give you more confidence that the right person will receive your benefit if the unthinkable happens.  

Did you know?

  • This type of nomination expires after three years within a super fund. Something as simple as this could have a major impact on your Estate Plan.
  • There may be considerable tax payable when passing on superannuation money to someone who isn’t your dependant.

Testamentary Trusts – Making provision for a testamentary trust within your Will allows an inheritance to be paid to a group of people instead of just one person directly. Someone is nominated as trustee to manage the trust and the potential beneficiaries are also nominated. This separation of control and benefits may provide taxation advantages, as well as protect assets from legal action involving a beneficiary and/or from being misused by a beneficiary.

 

Where to start?

  • Identify the important people in your life.
  • Determine their financial needs after you have passed away.
  • For business owners, think about your end game and how you will pass on the value you have built up in your business. 
  • Review your current Estate Planning arrangements.
  • If you don’t have these key strategies in place, prioritise getting this resolved. If you would like to speak with someone within our network, we can arrange that for you.  
  • Consider tax implications that could arise from your Estate Planning arrangements.
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Unfun Fact

50% of Australians do not have a valid will when they die. Their estates are often sorted out in the courts.