Most Australians tend to put insurance on the back burner and we often don’t consider whether we need it, or if we have enough. It’s not something we automatically think to adjust when we go through a big life change and it is often one of the first costs we cut when we need to tighten our budgets.
If this sounds like you, it may be a good time to really sit down and look into the insurance you have and any gaps that might need filling, as such important things can only be put off for so long before you find yourself in potential trouble – especially as if structured correctly, most costs associated to personal insurances can be tax deductible.
The following is an all too common tale in the insurance world that most Australians could learn from.
Brian was 42 years old and had always been fit. He ate well, didn’t smoke and exercised often. He also worked hard as a sole trader.
One morning, while out for a jog, Brian was hit by a car and rushed to hospital in a serious condition.
Due to the extent of his injuries, Brian was put into an induced coma and doctors were uncertain whether he would regain consciousness, or what state he would be in if he did. Acting on advice from concerned family members, his wife, Diane, began looking through paperwork to see what insurance cover he had.
Diane found a life insurance policy, which would pay out if Brian were given 12 months or less to live, but as this wasn’t his prognosis, no claim could be made to assist her with his mounting hospital bills. There was a trauma cover policy as well, but the premiums had not always been paid on time, so the insurance company had to review the claim to see if Brian would be eligible for any or all of the insured amount.
Luckily, Brian came out of his coma after a few weeks and the outlook was quite positive, although a long road of recovery and rehabilitation would be required. As Brian worked as a sole trader, there was no income coming in while he was recuperating, and the amount of insurance eventually paid out from his Trauma policy didn’t come fast enough to prevent a sale of some of his and Diane’s personal assets and use of their personal savings to cover medical costs.
Lessons Learned
Although Brian is a bit less agile and fit as he was, he is now back at work and feeling lucky to have made it through such a dreadful ordeal.
However, he wishes he’d been more prepared for unexpected events. If his Trauma cover premiums had been paid to date, the claim on that policy could have come through sooner. Particularly as he is a sole trader with no access to sick leave benefits, income protection and other insurances should have been in place to cushion the financial impact of an accident or illness.
How would you fare in Brian’s position?
Illness, injury and death are topics we don’t generally like to think about until we experience it close to home. How well would you or your family get along if you are unable to work for a long period of time, or even for the foreseeable future? Would you be able to pay your rent, mortgage, car payments?
Important change to insurance within super
As part of last year’s Federal Budget, the Government proposed a number of reforms designed to protect your superannuation savings. One of the key changes focuses on insurance held within super. This regulation was formally passed through Parliament earlier this year and will impact some of our clients with insurance cover.
What is the change?
Starting from 1 July 2019, if you haven’t made a contribution or rolled over funds in the last 16 months, you may not be able to continue to hold insurance cover within your account, unless you take action and tell the superannuation provider that you want to keep your cover by ‘opting-in’.
How can I keep my insurance cover?
If you are impacted by this change, you should have been contacted by your superannuation fund provider to let you know the types and amounts of insurance cover that you have through your super account and the date that your cover will end. This communication also included the action you need to take if you want to keep that insurance cover.
At Orbit, we think the greatest wealth is to be healthy and live well. And we’re all about supporting our clients and being there for them if you have any questions or when something goes wrong. So – even if you don’t spend a lot of time thinking about it, your insurance through your super can make a big difference to you and your family, if something unexpected happens.
When it comes to preparing for the future, we’re here for you. If you’d like a complementary assessment of your insurance, speak to Alina today on 1800 93 10 20 or get in touch here.
