Insurance Is Just Super
Newcastle Herald
Monday July 14, 2008
THE Australian Taxation Office has classified last year's superannuation changes as "Better Super", dropping the original term "Simple Super".
The changes to the superannuation system have made it the obvious ownership option for buying life insurance, total and permanent disability insurance and income protection insurance. The simplified superannuation reforms of July 1, 2007, have reignited people's interest in the tax-advantageous environment, particularly those aged over 55, and the rest of us still accumulating wealth. The advantages of having the flexibility of your personal insurances held within super (such as tax-effective funding, estate planning, cash flow and flexibility of benefits) are not well known, so why are Australians so underinsured and why do we not seek professional advice? Life doesn't always go according to plan, but it is possible to create plans around unexpected and difficult circumstances. Most Australians will have considerable assets when their home, superannuation, life insurances (including disability insurances) and other assets are tallied up. With sound advice and a well constructed financial plan, often the financial shock and reorganisational shock will be minimised. This will always be critical in helping with the emotional shock of losing a loved one (and even the disability of a loved one).We all want peace of mind to know that we and our loved ones are protected in the event a serious illness, injury and even death. But we are often not sure as to what type and level of cover suits us. A properly constructed financial plan will include an assessment of the risks. For instance, in the event of the major income earner becoming injured or ill and unable to work, how does the mortgage get paid, how are lifestyle and education costs funded and how do medical costs get paid? While most working Australians will have some life insurance through their superannuation fund, this will often not be enough. The cost of personal insurances (that is, income protection insurance) is often a deterrent to having it. With only 6 per cent of working Australians who have their income insured, this presents a problem, particularly as our income is our most important asset. If you earn $80,000 a year and the ability to practice in the profession is taken away, due to an illness or injury, over the course of the next 20 years, this will represent a $1.6 million asset that is not insured (excluding pay rises and inflation). It is essential to obtain professional advice to be sure that in the event of injury, illness or death, you and your family are not disadvantaged. Issues to be taken into consideration will depend on your financial situation and stage in life. Philip. T. Smith is a senior adviser with Hunter Financial Planning (psmith@hunterfinancial.com.au), an authorised corporate representative of Matrix Planning Solutions
© 2008 Newcastle Herald
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