What to consider when choosing a Life Insurance beneficiary?

When taking out a life insurance policy, it’s important to consider who should be your life insurance beneficiary and the role they play.

What is a life insurance beneficiary?

A life insurance beneficiary is the person who will receive your life insurance payment should you pass away.

When choosing yours, it’s important to think about who you would want to financially take care of should something happen to you. For most people, this is their spouse or children.

Nominating a beneficiary may seem straightforward, but there are a number of things to be aware of and plan for.

What to do if you don’t have a beneficiary
If you hold the policy in your name, your benefit will go to your estate and be managed as part of your will.

If you have outstanding debts when you pass away, your benefit may be used to pay them before it is distributed to the people named in your will – this means your loved ones could miss out on the payment.

Who can be a beneficiary?

Naming a beneficiary ensures your benefit is not paid to your estate and goes directly to the person you nominate.

It’s important to consider that if your beneficiary has any debts the proceeds might be used to pay them off. As well as this, keep in mind that if you nominate a minor such as your children, they will only receive the full amount once they turn 18.

Can you have multiple life insurance beneficiaries?

You can easily name multiple people as beneficiaries to your policy –  you can check with your insurer as to how many beneficiaries can be named on your policy.

If you do decide to choose several people, it’s useful to designate a percentage of the payment to each person, as opposed to a specific amount (as this may change).

You should also consider having a contingency beneficiary, should a primary beneficiary pass away before or around the time of your passing (for example, in an accident).

Who’s eligible to be a life insurance beneficiary?

You can nominate anyone 18 years of above as your life insurance beneficiary. This can be:

• a spouse, which includes a person (whether of the same or different sex) with whom you’re in a relationship with
• your child, including adopted child or step-child
• ex-nuptial child or your spouse’s child who is financially dependent on you
• a person with whom you have an inter-dependency relationship; either living together, have a close personal relationship or if one or each of you provides the other with financial or domestic support

What’s the difference between a binding and non-binding beneficiary?

If you have life insurance within your super, you’ll be asked to nominate a beneficiary – a family member or loved one who will receive the life insurance money if you pass away. You have the choice to make a binding or a non-binding nomination.

A binding nomination is a legally binding statement which your insurer will use to know who your money should go to if you pass away.

A non-binding nomination is not legally binding. Your insurer will take your non-binding into consideration when making the life insurance payment on your behalf, in addition to other aspects of the law.

To ensure your family is looked after when you’re not around, it’s important to keep your beneficiary details up to date within your super account.

How to keep your beneficiary up to date 

You should evaluate your beneficiary and policy at any major life event – for example, purchasing a home, having children, getting married, getting divorced or at the death of a loved one. Having life insurance beneficiaries up to date ensures your loved ones are taken care of financially if something were to happen to you.

If you have questions and would like your current insurance policies to be evaluated or any insurance related inquiries, please email us on ds@bluerocke.com with your contacts, for an exploratory meeting, at our cost, not yours.

Article Source : https://www.tal.com.au/slice-of-life-blog/four-things-to-remember-when-choosing-a-beneficiary

If you’re a member of a super fund, it’s more than likely you have insurance through your super. The cost of this insurance is deducted from your super account balance – so you’re effectively paying for it – unless your employer is covering the cost on your behalf. To help you, we’ve identified some key things to ask yourself when it comes to your insurance inside super.

1. Is insurance inside super something you need?

Deciding whether you need to have insurance, is something that only you can answer as it really comes down to your own personal circumstances. We’ve listed some scenarios below to help you with this.

Scenario 1 — dependants

If you have people depending on you financially, and you died unexpectedly, could your dependants continue to live the same lifestyle without you? Would you and your family be able to meet your mortgage repayments, and what if you’re self-employed? How about if you were ill, or injured, and as a result unable to work for a period of time, or permanently? In these cases, having Death only, or Death and Total & Permanent Disability insurance, could help to provide financial security.

Scenario 2 — no dependants

If you don’t have anyone financially depending on you, but you were unable to work for an extended period of time due to an illness, would you be able to cover your expenses without an income? If not, perhaps Income Protection insurance is something to consider.

2. Which types of insurance inside super are most appropriate for you?

There are three main types of insurance cover available through your super.

1. Death insurance cover

   This type of cover is designed to provide your family, or any nominated beneficiaries, with a sum of money if you were to die. It may also come with Terminal Illness cover which provides financial support if you are diagnosed with a terminal illness.

2. Total and Permanent Disability (TPD) cover

   If you were unable to work ever again in an occupation that you are suited to, because of a disability, this type of cover pays you a lump sum which could help to pay for things like your living expenses or repay any debt you may have, such as your mortgage.

3. Income Protection (IP) cover

   If you’re injured or suffer an illness, or have a disability and are unable to work for a temporary period of time, this cover would provide you with a short-term income stream to help you pay for things like living expenses or cover debts.

So, what is income protection?

Income protection insurance is designed to provide an income stream if you can’t work due to certain reasons, like injury or illness.

Generally, income protection insurance will replace part of your income (up to 75%) if you’re unable to work due to injury or sickness and can’t work. However, this is usually subject to certain monetary caps. To receive benefit payments, insurers will typically require you to be totally or partially disabled or have a specific injury or sickness that renders you unable to work.

Key features of income protection

• This type of insurance is designed to step in and replace your income should you become sick or injured. You can just set up your monthly payment and have peace of mind knowing you’re covered if something happens.
• You should look at income protection insurance as a financial safety net – it pays you a percentage of your wage, for a set period if you’re unable to work due to a sudden illness or injury. So, if you had a serious car accident, and couldn’t work for six months, you’d get regular payments from your insurer – meaning you could focus on getting better without falling behind on bills.
• For a monthly payment – usually around 1-2% of your salary – income protection insurance gives you peace of mind if you become too sick or injured to work.

3. How much insurance inside super do you need?

Insurance calculators are a good starting point to work how much insurance you may need, depending on your personal circumstances. You may also want to consider speaking with a financial adviser as they’ll be able to assess your situation and advise which types of policies could work best for you.

Some things you may want to consider include:

• The amount you’d need to cover your current lifestyle if you were unable to work for an extended period or permanently.
• Whether you or your family could rely on other financial resources if you were unable to work or died.
• Any debts you have such as a mortgage.

Bottom line: when deciding if having insurance inside super is beneficial, it really comes down to being clear about your own circumstances and what’s best for you. A financial adviser may be able to help in making this decision.

If you have questions and would like your financial situation to be evaluated, please email us on ds@bluerocke.com with your contacts, for an exploratory meeting, at our cost, not yours.

Article Source: https://www.mlc.com.au/personal/blog/2020/07/insurance_in_a_crisis

New To Getting Personal Insurance?

These 3 articles explain the different Personal insurance concepts:

1. types of Insurance and potential uses
2. how much cover do you need?
3. ways to make life and TPD insurance more affordable

Did you know?

In a recent survey, 46% of Australians admit that they live ‘pay cheque to pay cheque’ including:

• 1 in 4 households earning over $150,000 pa, and
• 1 in 5 households earning over $200,000 pa.1

Seek advice. A financial adviser can help ensure you have the right insurances in place to help protect your family’s lifestyle. The first step is having the conversation. Contact Dev Sarker at 1300 717 136 today!

1 Research conducted by IPSOS on behalf of MLC in August 2015 and published in February 2016 in ‘Australia today – Part 1: A look at lifestyle, financial security and retirement in Australia’.

What is income protection?

Also known as ‘salary continuance insurance’ or ‘disability income insurance’, income protection provides a portion of your income, for example 75% of your annual salary, if you are unable to work due to injury or sickness for a certain period of time. You need to advise your annual salary when you take out the cover.

Income protection policies always have a waiting period and a payment period. The waiting period is the time you must wait from when you make a valid claim, to the time you become eligible to start receiving payments. The payment period is the period you can be paid so long as you remain unable to work. Other terms and conditions apply depending on the policy. All of these factors affect the level of premiums you pay.

What are the changes?

Recently, the Australian Prudential Regulation Authority (APRA) announced that it is concerned that insurance companies have been keeping premiums at unsustainably low levels to compete for customers. APRA also think that some policies have very generous features and terms that, in some cases, provide a financial disincentive for people to return to work after successfully making a claim.

Has APRA announced what changes will be made?

Yes, effective from 31 March 2020, insurance companies must:

• stop providing ‘agreed value’ policies that are based on the income you advise at the start of cover, regardless of any subsequent change in income. This means no more ‘agreed value’ contracts can be bought or sold after 31 March 2020.

What other changes are likely to be made?

Other changes, effective from 1 July 2021, include:

• your insured income is to be based on your annual income at the time you make a claim, and are not able to look back more than 12 months
• limits of 100% of income replacement payments can be made in the first six months and 75% thereafter, with a total limit of $30,000 per month
• a maximum payment period of five years, with a right to renew cover
• insurance providers must have adequate risk management processes in place to mitigate the risks associated with long term benefit payment periods.

APRA is seeking feedback on the above changes from the industry by 29 February 2020 and will make a final decision by 30 June 2020.

What happens to existing policies?

If you have an existing retail income protection policy which include a ‘Guarantee of Renewability’ in the policy wording, that is, the policy is automatically renewed each year, your policy will continue.

Are policies which meet APRA’s new expectations available now?

No, to purchase an income protection policy which takes into account APRA’s changes we need to wait until the insurance providers have issued new policies with new Product Disclosure Statements.

More information

For more information, please read APRA’s media release or contact our financial adviser, Dev Sarker today at 1300 71 71 36.

Owning and operating a small business is hard work.
The last thing you need is to lose it all because of poor insurance choices.

Do your homework

First you need to work out what needs to be covered. There are the obvious things such as plant
and equipment, the less obvious things such as public liability, professional indemnity, and finally protecting the financial performance and position of the business on the sudden loss of a key person.

Policies should cover a wide range of eventualities and each business should have a policy package specifically geared to its needs.

People are the most important assets, and the success of the business may hinge on key personnel.

Business expense insurance can cover certain fixed business expenses, and key-person insurance can protect the financial performance in the event of a key person or business owner dies, is permanently disabled or suffers a traumatic event.

Insufficient coverage

Owners risk losing control of their companies, serious financial losses, and complex partnership problems by being uninsured, or under insuring against something going wrong.

Having the wrong kind of insurance is equally risky and ultimately a waste of money, which is why
it’s necessary to seek advice on the right insurance for your business.

It’s also important to regularly review and update your insurance, especially when your business grows or changes.

There is always tax

Your accountant should assess all taxation matters including the tax deductibility of premiums together with any potential CGT or GST issues.

Working together with your financial adviser to determine what insurances can be put in place
is an important consideration when running a business.

The Insurance Council of Australia, http://www.understandinsurance.com.au, and the Australian Taxation Office, http://www.ato.gov.au, have more information.

Want to know more?

Talk to a BlueRocke financial adviser, call us on 1300 71 71 36.

According to a recent survey by research firm East & Partners for lender Scottish Pacific, nearly 80 per cent of owners of small and medium enterprises said cash flow issues caused them the most sleepless nights.[1]

So what might you do to improve your cash flow and sleep better at night? Here are five tips.

1. Build a cash reserve

Cash flow is the lifeblood of any business. To ensure that it makes, not breaks, your business, it’s important to build a robust cash reserve. This may help you meet your financial obligations in difficult times and allow you to take on opportunities to grow your business.

2. Separate business and personal money

By keeping business and personal expenses separate, you may better understand your business’s cash position. It may also ensure that you don’t use money meant for your business on personal expenses; for example, a holiday or your mortgage.

3. Get paid on time

If your business hasn’t been actively pursuing unpaid invoices, you may want to make it a practice – and have a strategy – to regularly chase up payment. Finding ways to encourage prompt payment, such as offering a discount to early payers, may help.

4. Control business costs

Controlling costs might help you to maintain a healthy cash flow. Experts suggest taking stock of your business expenses regularly to identify where you can cut costs without sacrificing growth. This may include reviewing your suppliers and negotiating better rates with them.

5. Protect your business

By taking out business expenses insurance and key person insurance, you may help ensure your business can meet its running costs if you or a key employee is too ill to work. Both insurance plans provide a monthly benefit if you or a key person in your business become incapacitated.

Work with a professional

Your professional financial adviser could tailor your insurance plans to your business’s cash flow protection needs, safeguarding what you’ve worked so hard to build.

Contact Dev Sarker on 1300 71 71 36 today!

[1] Scottish Pacific and East & Partners, October 2018, ‘SMEs flag higher revenue growth, but prospects could be dampened by declining property market and cash flow issues,’ accessible at: https://www.scottishpacific.com/media-releases/smes-flag-higher-revenue-growth-but-prospects-could-be-dampened-by-declining-property-market-and-cash-flow-issues