Heart disease and stroke continue to be the two most common causes of death⁵ in Australia for people over the age of 45 and accounted for over 30,000 Australian fatalities in 2012. Incredibly, thousands of Australians are underinsured or have no insurance in place to cover the expenses should they suffer a debilitating illness.

According to the Cost of Cancer in NSW ⁶report, the total expected lifetime economic cost of cancer – taking into account both the financial cost and the burden of disease (lost productivity, burden on healthcare system) – is almost $1m per person. Certainly for an individual being treated for cancer, out of pocket costs in excess of $100,000 are not uncommon. Many financial planners use a rule of thumb for calculating an appropriate sum insured which at minimum should allow for the removal of debt and the provision of one year’s income, but this is merely a starting point.

These initial figures should be considered along with the financial cost to the individual and family, and importantly the ‘true cost’ of the disease. 

You can rely on trauma insurance

Trauma insurance can cover between 10 to 50 medical events and will pay in the event you suffer a defined health trauma, regardless of your work status. It pays a lump sum to help cope and recover from serious health conditions such as cancer, strokes and heart attacks. Some insurers also offer partial payments for less serious conditions.

Medical advances have meant that our chances of surviving traumatic events are much better than in the past. However, the cost of treatment can sometimes be beyond your normal means. Without trauma cover, you may need to dip into your children’s education fund or your retirement savings; or you might even have to increase your mortgage to pay for expensive treatment.

The difference to income protection

Importantly, a trauma payment is not dependent on you being unfit to work (unlike income protection, where you need a doctor to certify your ongoing health). The diagnosis of a traumatic condition might mean that you physically could go to work, but would prefer to spend time with your family and reduce any work-related stress while you recover and consider how your future will be affected.

To make sure you don’t increase the statistics, check your policy documents to see which level of cover you hold, and speak to your financial planner if you are unsure. They can help you determine what cover you already have, what changes or additions may be appropriate and how to make them.

Speak to your Leenane Templeton Financial Planner to discuss your insurance options. Contact us at 02 4926 2300 or email success@leenanetempleton.com.au.

Source: Zurich

⁵ Leading Causes of Death, Australian Institute of Health and Welfare, www.aihw.gov.au/deaths/leading-causes-of-death.

⁶ Cost of Cancer in NSW, Access Economics Pty Limited for The Cancer Council NSW, 2007.

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There is no doubt that the very thought of claiming on your own insurance policy is depressing, but the research proves that you (and even me) may be unable to work for an extended period during your working life due to sickness or an accident. The problem is that nobody has any idea of when that might happen. Please try to fight the urge to stop reading now and ‘worry about it later’ because there is an important message here. 

It’s a confronting topic that makes us think about our own mortality. However, as a financial adviser I have helped many clients through the process. The worst can happen to anybody. If it does happen to you, you want to make sure that:

i) you took due care (supported by advice and help from someone in the know) when preparing your initial application, and
ii) that you actually have the cover in place. The first question after, ”are you ok?” is often, ”do you have insurance?” If you think your answer would be, ”I think so” or  ”no”, please stop now and consider how your family would cope in this situation, or more to the point, how would you cope financially if something happened to a beloved family member?

Before you get to that point, where do you start if you don’t have cover? 

Firstly, at Leenane Templeton you can talk with Roger Ward a licensed financial adviser who specialises in Personal Risk Insurance. The application process is so important to ensure a stress-free outcome in the event of a claim. It has to be done right; and the conditions and definitions (the boring stuff) must be spot on. Don’t be satisfied with approval of cover that required very little in the way of medicals or blood tests. You may think you have cover but it’s a nightmare to be told at claim time your application is rejected because you ‘broke the rules’ since you forgot (often genuinely) to tell the insurer something small but now seemingly crucial. 

A professional adviser like Roger will ensure you have insurability from the very moment the cover is granted. Yes, you will have to pay for that advice, but believe me it’s invaluable. As I say, the last thing anyone wants when they have suffered a serious injury or have been diagnosed with a life-threatening illness is a delay.  Or worse still, have any doubt the claim will be paid.

This is where the role of an adviser throughout is so important. Your adviser will know someone ‘higher up’ and ‘in-house’ who can back them up through the process. That means, it’s not only your adviser who is onto the insurance company but their contacts, who are often part of a large Head Office which the insurer does not want to get offside. This alone is a huge factor over buying insurance ‘online’, because who will be there to back you up?

Roger is ready to answer any questions about insurance you may have. 
Call (02) 4926 2300 or email us. 

Please don’t put the insurance talk off any longer – and this is the pulling on the heart strings part – do it for your kids and family if for nothing else. 

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Your most important asset is your capacity to work and generate an income. If you are unable to work due to sickness or injury, how would you continue to meet your financial obligations and continue your present lifestyle?

Being unable to work due to sickness or injury is a very real and frightening circumstance. Six in ten Australians will be disabled for more than one month during their working life and one in four will be disabled for more than three months. Despite not being able to earn an income, your financial commitments will continue despite the fact you are not working. Risk needs to be managed to ensure that you can continue to support yourself and your family during the time that you are incapacitated. Personal risk insurance is one way of managing this risk – income protection provides a monthly income stream to compensate for your lost income when you are unable to work due to sickness or injury.

Income protection premiums are generally tax deductible as the premiums represent the cost of protecting your income stream. The benefit of the tax deduction is tied directly to your taxable income and can represent a substantial reduction in premium in your after tax cost.

As you approach the end of the financial year, reviewing your current income protection needs may have an added tax incentive. After discussions with your planner, you may be able to pay for the annual cost of cover in this tax year and secure a full tax deduction for the cost of cover.

Income protection premiums may be funded using your accumulated superannuation balance – meaning you do not have to fund the cost of premiums from your earnings or savings.

Income protection insurance inside superannuation offers a cash flow advantage by using the accumulated balance in your superannuation account. This strategy does not require you to pay any additional premium from your earnings or savings. Your financial planner will arrange the payment of the income protection premiums from any superannuation account whether directly in your current fund, or via a rollover to the income protection policy.

It is important to note that income protection inside superannuation is not always appropriate and needs careful consideration from your planner. Using your superannuation account balance to fund an income protection insurance premium will erode your retirement savings – the impact of such needs to be discussed to ensure you can still meet your retirement goals.

Your financial planner will talk to you about the limitations that exist when funding an income protection premium through superannuation. There may be some benefits that are important to you that cannot be offered through superannuation. In this case, you may be able to split the cost of your income protection premium using superannuation and after tax earnings. In this scenario, your superannuation account can fund up to 95 per cent of the total premium, ensuring that there are still significant cash flow benefits in this model.

Few consumers have the ability to navigate through the opaque and complex taxation and regulatory rules relating to income protection. However, it is vitally important for all income earners to consider what happens if they are incapacitated, and how to manage this risk. A discussion with your financial planner will help you to formulate a strategy that is both appropriate and cost effective.

Source: TAL.

Call (02) 4926 2300 or email us.

To discuss protecting your income and types of insurance available to you, please do not hesitate to contact the specialised risk management team at Leenane Templeton.

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Although a health crisis can occur at any time of life, the risks obviously increase as we age which is why insurance is important at any age. Unfortunately, due to the increased risk of illness or injury the cost of insurance for those over 50 can be high. As a result, people in this age group often drop their insurance cover altogether just when their need is at its greatest.

If age 50 is looming, or you’ve already passed your half century, it’s even more important to protect both your income-earning ability and the financial security of your dependents. This can be achieved with appropriate insurance.

Here are some solutions to consider:

• Life and disability insurance can be arranged through most superannuation funds. Premiums are paid from the superannuation thereby reducing strain on the household budget.
• Review your level of insurance. As your investments and superannuation increase, or your debts and expenses decrease you may be able to reduce your cover and still provide for your beneficiaries.
• For income protection insurance, if you have savings in place, annual leave or sick leave entitlements, you may consider increasing the waiting period before a claim. Depending on circumstances, this may allow you to retain an important benefit at a more affordable price. More-over, while Income Protection cover targets insuring 75% of your Gross Wages, your annual cashflow needs to cover living costs may be lower than this. You may consider reducing the monthly benefit in line with your cashflow needs thereby reducing the cost of cover.

If you’re not sure what to do, talk to one of our licensed financial adviser here at Leenane Templeton before you make any adjustments to your insurance cover. It may not cost you as much as you first thought.

Call (02) 4926 2300 or email us.

To discuss how insurance is important at any age please call our specialised financial and risk management advisors to discuss your circumstances further.

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Dr Barnard saw a need for financial assistance for patients who suffered a significant illness or accident.  “When I went into private practice I could not help but notice that while many patients eventually fully recovered medically, they suffered severe financial problems. This was not because of the cost of the operation but because of the disruption to their lives and their loss of income,” Dr Barnard said.
 

Trauma insurance can fill this gap. Where total and permanent disablement (TPD) requires you to be unlikely to work again, and income protection pays if you are unable to work either temporarily or permanently, trauma payments require you to meet the definition of one of a list of specified diseases and injuries.  So it’s not about the level or length of the disability; rather, it’s based on the diagnosis.
 

You may have heard trauma insurance referred to by another name, such as living, critical illness or crisis recovery. Trauma insurance can be complicated, with different policies covering different conditions, each with specific definitions. 
 

Initially, just a handful of conditions were covered: cancer, heart attack, stroke and coronary artery surgery.  This list has expanded and some policies cover up to 40 conditions including degenerative diseases like multiple sclerosis and Parkinson’s disease, paralysis, comas, loss of speech, deafness, chronic organ failure, major organ transplants, occupationally acquired HIV and even severe rheumatoid arthritis.
 

Because trauma insurance provides a payment based on diagnosis, rather than the level of impairment, working out the right sum insured is complicated. Consider that for cancer, a claim may be for a melanoma or may be for stage 3 lung cancer. Trauma provides you with a one-off lump sum so income and capital requirements need to be considered. Deciding the right amount of cover for you will involve a detailed discussion with your adviser around two key areas:
a) What will you need at the time of your illness/injury
b) What do you want your life to look like afterwards.
 

Income needs
 

Firstly, your adviser may consider your income needs. As income protection only covers you for 75% of your income, many advisers will recommend that you top this up to 100% with trauma. The period you allow for is up to you, although a general rule of thumb is to allow at least two years.
 

You may also consider the other income in your household. If you were undergoing treatment for cancer, or diagnosed with motor neuron disease, would you need and/or prefer for your partner to take some time out of the workforce to look after you and your family?
 

Having this option to step out of the workforce to concentrate on your recovery can make an enormous difference.
 

Medical costs
 

Secondly, you and your adviser may consider the cost to have access to the best medical care available. You should consider the cost of treatment, potential travel and accommodation along with ongoing therapy. It can be difficult to quantify how much could be required. The cost of treatment and loss of productivity from cancer has been estimated at hundreds of thousands of dollars in a report for the Cancer Council of NSW.
 

When looking at medical costs, it isn’t just about treatment costs. Having access to quality rehabilitation services will assist your recovery. Whether this be physiotherapy, wellness services, counseling or alternative medicine, your plan needs to include an amount to fund your recovery. 
 

Moving forward
 

Finally, it’s important to contemplate what changes you may like to make to your life.  Will you still have the same drive to return to work? Your priorities could change, and planning for this can give you the ability to reduce your hours or cease work entirely. If you’re working towards retirement, you may wish to bring this date forward. Your adviser can discuss with you how these objectives can be achieved, such as through replacing income or reducing debt, so that less income is required.
 

While trauma is not well known, you are more likely to claim on this cover than life or TPD insurance.  Spending time with your adviser to talk through your personal situation and plan for your individual needs is an important step in making sure you have the right level of cover in place.
 

Case Study
 

Eleanor is a 44-year-old anaesthetist.  She is married to Matt, an engineer, and they have two children aged eight and six. 
 

She discussed with her adviser how difficult it was to consider what she would do if diagnosed with a serious disease or injury, but there were a number of scenarios she was sure of. Eleanor knew that if she had to go through treatment for cancer, she wanted Matt to be able to care for her and the children. She also said if she was diagnosed with a degenerative disease like multiple sclerosis, she would want to change her priorities, step away from work and focus on her well-being.
 

With her adviser, they put together a sum insured that would cover 25% of her income for two years (her income protection policy will provide the other 75% if she is off work). They also calculated lump sum for medical care and enough to pay off their mortgage. While paying off the mortgage was not a specified need, the ability to do this would allow either Matt or Eleanor to cease working. While the future is uncertain, talking through and understanding their protection plan has given Eleanor and Matt confidence that they’ve prepared for the unexpected.
 

For more information on trauma and risk insurance, contact your our specialist advisors here at Leenane Templeton.
 

Source: BT
1. Cost of Cancer in NSW by Access Economics http://www.cancercouncil.com.au/wp-content/uploads/2010/11/costofcancer_summary.pdf
 

Disclaimer
 

The post Preparing for the unexpected with trauma insurance appeared first on Newcastle Financial Planners & Financial Advisors.

We all know the importance of protection for adults, but if child cover doesn’t feature in the protection mix, you could be left exposed to financial consequences if your child suffers illness or injury.

When putting a protection plan in place, the main focus is naturally to insure against events impacting their own health. But in the case of parents with dependent children, a plan which doesn’t address the financial consequences of a serious child illness is incomplete.

Parents with children who suffer severe illness or trauma not only deal with enormous emotional strain but also are likely to suffer severe financial stress. They face unexpected indirect costs of treatment, recovery, time off work – all of which are not covered by Medicare or health funds.

Imagine this…

A professional couple in their late thirties with two young children are committed to their careers and earn good salaries. They have two cars, and a 4 bedroom house in an affluent suburb.

They have a solid protection portfolio in place, the top income protection contract, term insurance with a solid sum insured, own occupation TPD cover and the best trauma insurance available.
If anything happens to either of them, they are covered.

But what if something terrible happened, to one of their children?

The fact is that children can suffer serious traumatic illnesses and accidents. In these circumstances, as parents, we would want to do everything in our power to help them, including being there for them.

The financial implications

Stopping work for months or even years to care for a seriously ill child can have devastating emotional consequences.

Additionally, there is likely to be substantial out-of-pocket costs associated with treatment, travel costs and medicines.

The late thirties and forties are the ages when people are generally at their most exposed financially. ABS figures1 show that for couples with children under 5, over 93% have household debt, and that for the same people, the average amount of debt is 2.5 times their annual household income. In both cases these figures represent the highest level of indebtedness of any life stage.

Hence, having appropriate life insurance coverage is important.Yet the majority of risk recommendations don’t include cover for this type of scenario.

Why child cover is a must. Consider the statistics…

A recent report from the Australian Institute of Health and Welfare (AIHW)2 revealed that in 2009, an estimated 7 per cent of Australian children had a disability and of these, over half had profound or severe core activity limitations (4 per cent). Compared with other children, those with a severe disability rely more heavily on parents and siblings. In fact, in the period 2009-10, over 57,600 children aged 0-14 used National Disability Association services (majority in their own home).

And did you know that on average, an Australian child under the age of 14 is diagnosed with blood cancer every 36 hours? The average length of treatment time for boys is two years and for girls it is three years3.

So with the possibility that any parent may need to take time off to support a sick child, why do we tend to overlook this type of cover? It is, after all, widely available and is far from expensive, with $100,000 cover in most cases only costing around $10 per month.

For more information on child cover, contact our Financial Planners today. Remember to 'Like' Leenane Templeton Chartered Accountants on Facebook, Twitter and Google +.

1 ABS Australian Social Trends 4102.0, 2009 http://abs.gov.au/AUSSTATS/abs@.nsf/okup/4102.0Main+Features60March%202009
2 AIHW Report ‘A picture of Australia’s Children 2012’
3 Leukaemia Foundation (2011) ‘Fact Sheet: blood cancers in children’, Leukaemia Foundation, Australia
Source: Zurich, August 2013

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