Insurance: Every 12-18 months, make sure you ask yourself these questions

Posted on 4 May 2022
Insurance: Every 12-18 months, make sure you ask yourself these questions

Clarity
(OnePath)

We have 5 important questions to ask yourself in relation to your insurance needs. If you answer YES to any of these questions, you could benefit from reviewing your insurance cover with the help of your financial adviser.

1) Have you welcomed any new members to the family or taken on new responsibilities such as caring for an older relative?

You might want to add a new beneficiary to your policy or increase your amount insured to cover for your growing family’s future needs and the increased financial responsibility you have.

2) Have you changed jobs or got a promotion?

Your income is your biggest asset over the course of your life. If your income has changed, your future needs have likely changed too – so you’d benefit from reviewing your sum insured with your financial adviser.

This is especially important if you’ve got income protection. That’s because your benefit amount, and the premium you’re paying, are directly linked to the personal income we have recorded on your policy.

If your income has changed, get in contact with your financial adviser to review your policy.

3) Have you paid off large debts?

The amount you’re insured for is to cover for your future financial needs should something happen to you. If you’ve significantly paid down large debts, your needs may have changed.

You may want to think about reviewing your sum insured to ensure it’s right for your needs – not too little, and also not too much.

4) Have you taken on any new debts?

Being insured for the right amount is an important factor of cover suitability. Customers usually need a level of cover that can, as a minimum, pay off any existing debts should something happen to them. If you’ve taken on new debts, your needs may have changed.

You should review your cover with your financial adviser to ensure you’re covered for the right amount.

5) Does your policy have a health loading? Has your health improved – or have you stopped smoking?

Personal risk factors such as smoking and your Body Mass Index (BMI) add what are called ‘premium loadings’ to your cover – which means you pay a higher premium than someone who doesn’t have this risk factor.

If your health has improved (e.g. you’ve lowered your BMI or your lifestyle has changed recently), get in touch with your financial adviser to review your policy and determine if these loadings can be removed to help lower your premium.

Ways you can adapt your cover to your current needs:

a) Choose the amount you’re insured for

Your premium is closely linked to the total amount you’re insured for. And it’s important to make sure you’re covered for the right amount, not too little, not too much. To find out more, see How much cover do I need?

Choosing the premium type that’s right for you can have a big impact on the lifetime cost of your policy, and your financial adviser will be able to help with forecasting that impact.

To find out more, see What’s the difference between stepped and level?

b) Choose to accept or decline indexation

Indexation, if available, is an automatic increase to your sum insured to ensure the value of your policy is not eroded by the impacts of inflation.

But you’re in control – it’s important to know that as the sum insured increases, the premium you pay may also increase. This means there are circumstances in which you might want to decline the indexation offer. Speak with your financial adviser about what is best for your personal circumstances.

To find out more, see What is indexation and how does it work?

c) Remove any loadings you might have

Personal risk factors such as smoking, dangerous hobbies or occupations, or a high Body Mass Index (BMI) may add what’s called a ‘premium loading’ to your cover – which means you pay a higher premium than someone who doesn’t have those risk factors.

Any loadings like these are recorded on your Policy Schedule. So, if your health improves or your lifestyle has changed recently, get in touch with your financial adviser to review your policy and determine if these loadings can be removed to help lower your premium.

In the end, you’re in control – you can review your cover with your financial adviser and adapt it to your needs.

 

 

 

Posted in:News  

The importance of a will

Posted on 3 May 2022
The importance of a will

(Feedsy Exclusive)

Planning our estate is a vital part of any wealth management process. Deciding who is entitled to what after we die is not something that can be put off and left until later. It must be clearly and legally defined well ahead of time.

This article is designed to serve as a guide, answering some of your questions and preparing you for planning your estate. Don’t forget to get in touch for further information or support.

Our will is essentially a contract; a legally binding document which dictates what happens to our estate after we are no longer here. In many instances, a will is straightforward and non-complex, but it should not be assumed that this is the case.

Instead, it is critical that we understand precisely the contents and structure of our will so that we can ensure that each benefactor is getting what they are entitled to. Passing on a legacy and assets is a serious business. It pays to make sure everything is being taken care of.

Wills and Power of Attorney

A Power of Attorney document is similar to a will but it is enacted while the individual in question is still alive. In short, it ensures that a trusted candidate is able to take legal and executive action regarding your assets or estate if you are unable to do so yourself.

There are two types of Power of Attorney applicable in Australia. Each comes with its own set of caveats according to which state or territory you are in. The types are:

Enduring power of attorney – which enables a nominated individual to manage your assets in the event of an illness or accident, or in the event that you are absent.

Medical power of attorney – which enables an individual to take control of your assets and act in your best interests if you medically are unable to decide for yourself.

What Happens Upon Death Without a Will in Place?

If the worst happens and someone dies without an adequate will in place, the estate will be dealt with according to the laws of the territory or state. In Western Australia, for example, the estate is divided up among immediate family members and the spouse, based on a ratio which decides who is entitled to what.

This can lead to step-children being left with nothing, for example, or a spouse being left homeless because the house is in the deceased’s name and is more than their entitlement is worth.

Superannuation as Estate Planning Vehicle

A superannuation can provide an effective means of planning your estate and ensuring the right benefactors get the right assets. However, this can be a complicated procedure, thanks to the taxes involved with superannuation death benefits and the fact that not all assets tied up in the fund will automatically be counted as part of the estate.

However, despite the complexity, the SMSF option can still be beneficial. By including a death benefit clause to pay out to your children – all minors – in the event of death, your children can receive the benefit tax free if tragedy occurs. This can be reviewed at a later date to ensure that you and your loved ones continue to enjoy the most advantageous terms.

Tax Dependent vs Superannuation Dependent

Under Australian law, a tax dependent is defined as any individual who is classed as a dependent for tax purposes. This can include a spouse or a child under the age of 18.

A superannuation dependent, on the other hand, is defined as an individual named as part of the superannuation death benefit benefactors, but is not dependent on the trustee for tax purposes. This can include an adult child, for example.

A death benefit on a superannuation fund can be paid out in a number of ways, based on which of the dependent categories the benefactor fits into.

If the benefactor is receiving a lump sum directly from the fund, they must be classed as a superannuation dependent. If they receive a pension from the fund, they may be classed as a tax dependent in some circumstances.

It can be difficult to disentangle the two categories and to position your superannuation fund in the most advantageous way. Get in touch with us for guidance and more information.

Child Account Based Pensions

Finally, a child account based pension can ensure that a pension is paid to your child in the event of your passing until the child reaches 25, upon which they receive a lump sum. Children with severe disabilities may be eligible to receive the pension for longer.

In certain circumstances, these pensions can be delivered tax free, so it is advisable to seek advice to find out if they are the best option for you. Speak to your financial adviser today to learn more about the importance of planning your estate and to ensure that all the moves you make are the right ones.

 

 

Posted in:News  

Think about Superannuation early on in life

Posted on 28 April 2022
Think about Superannuation early on in life

You may think your retirement is far off—so no worries, right? Not so fast. To ensure you have enough funds to live well when you retire, you need to learn what you need to do now to make sure you can have the lifestyle you’ve worked so hard to have—for the rest of your life. A big part of that planning has to do with your superannuation—your “super.”

People used to start thinking about their super at around their fiftieth birthday, but now we know that thought process needs to start earlier—much earlier. The laws that govern your super can be difficult to navigate, but you need to dig into them to find out how to maximise your benefits. Do it now—and you can chart a wise financial course for a lifetime.

How does my super work? Supers work like managed funds. The government pools your super contributions together with other members and invests it. Your employer will contribute to your super fund, as can you—up to a certain amount per year. If you earn below a given amount, the government will also contribute to your super.

How do I choose a super fund? Ask your employer if you have a choice in the fund into which they pay your super. Some employers limit your choice of funds. If not, then you can get advice from a financial professional or look at comparison websites to help you choose.

Take Charge—Take Ownership

Your superannuation is just as important as your bank account. Perhaps even more so, since it’s your financial cushion for a time when your earning power isn’t as great as it is now. It’s your money, after all–so take ownership of it. Become proactive, and you’ll maximise your investments for a lifetime free from worry.

How can I maximise my contributions? If you’re not self-employed, the more you earn, the more your employer will pay into your super, since the amount required is equal to a percentage of your earnings—currently 10%. If you are self-employed, you must make your own super contributions. A wise guide would be to invest as much into your super as you would with another employer.

May I make extra contributions? Yes, you can. There is a limit, however. You can either ask your employer to deduct part of your pre-tax salary into your super, or you can transfer a part of your savings accounts into your super. You can also transfer part of other investment funds into your main super fund. Here’s where it pays to have some advice to learn which laws apply—and how to leverage those best for you.

How do I choose investment options? Because most super funds give you a choice of investment options that include various types of investments—shares in stocks and other funds, real property, or cash—it’s important to choose the best alternative for your needs. Your choice impacts your risk for market ups and downs, as well as how quickly your investment will grow. If you’re not a financial professional, it helps to talk to someone who is to help you sort out all your options.

Discuss Superannuation with Your Kids

Once you see how much benefit proper super planning can be to creating the kind of financial cushion that will ensure a comfortable life in one’s golden years, you’ll want to share your knowledge with your children. It’s never too early to plant the seeds of financial prudence.

Your kids, too, need to be aware of the opportunity they have to start early to build up their investments while they’re still young. Show them a disciplined pattern of saving, and they’ll follow your example to become savvy investors when they start earning their own money.

  • Superannuation–a Lifetime Vehicle for Tax-Effective Investment: Teach your kids that from the moment they start working, they need to think about how their super will help them invest wisely so they can have a lifetime of income.
  • Superannuation—a Legacy of Love: When your kids learn that their prudent planning can help provide for the needs of their own children, they will begin to look beyond the “now” and think more long-term. That’s a legacy that will outlast you—and help provide for your family’s future down through the generations.

Seek Professional Advice on Superannuation

Legislation changes constantly to keep up with the times, all changes are complex in terms of how they can affect your overall financial position, so it helps to have someone in your corner who can sort through all the regulations and to help you find the best way to save for your retirement.

To learn more about how you can get support to maximise the benefits of your superannuation, contact your financial adviser today.

Posted in:News  

Get the maximum value from your life insurance

Posted on 14 April 2022
Get the maximum value from your life insurance

Your life insurance is flexible and can be adapted to your changing needs. Make sure you have a cover review with your adviser every 12-18 months to ensure you’re covered or when major life events occur, for just the right amount, paying the right amount, and getting the best value from your policy.

Every 12-18 months, make sure you ask yourself, have you:

Welcomed any new members to the family or taken on new responsibilities such as caring for an older relative?

You might want to add a new beneficiary to your policy or increase your amount insured to cover for your growing family’s future needs and the increased financial responsibility you have.

Changed jobs or got a promotion?

Your income is your biggest asset over the course of your life. If your income has changed, your future needs have likely changed too – so you’d benefit from reviewing your sum insured with your financial adviser.

This is especially important if you’ve got income protection. That’s because your benefit amount, and the premium you’re paying, are directly linked to the personal income we have recorded on your policy.

If your income has changed, get in contact with your financial adviser to review your policy.

Paid off large debts?

The amount you’re insured for is to cover for your future financial needs should something happen to you. If you’ve significantly paid down large debts, your needs may have changed.

You may want to think about reviewing your sum insured to ensure it’s right for your needs – not too little, and also not too much.

Taken on any new debts?

Being insured for the right amount is an important factor of cover suitability. Customers usually need a level of cover that can, as a minimum, pay off any existing debts should something happen to them. If you’ve taken on new debts, your needs may have changed.

You should review your cover with your financial adviser to ensure you’re covered for the right amount.

Does your policy have a health loading? Has your health improved – or have you stopped smoking?

Personal risk factors such as smoking and your Body Mass Index (BMI) add what are called ‘premium loadings’ to your cover – which means you pay a higher premium than someone who doesn’t have this risk factor.

If your health has improved (e.g. you’ve lowered your BMI or your lifestyle has changed recently), get in touch with your financial adviser to review your policy and determine if these loadings can be removed to help lower your premium.

If you answered YES to any of these questions, you could benefit from reviewing your cover with the help of your financial adviser.

Ways you can adapt your cover to your current needs:

1) Choose the amount you’re insured for

Your premium is closely linked to the total amount you’re insured for. And it’s important to make sure you’re covered for the right amount, not too little, not too much. To find out more, see How much cover do I need?

 

Choosing the premium type that’s right for you can have a big impact on the lifetime cost of your policy, and your financial adviser will be able to help with forecasting that impact.

 

3) Choose to accept or decline indexation

Indexation, if available, is an automatic increase to your sum insured to ensure the value of your policy is not eroded by the impacts of inflation.

But you’re in control – it’s important to know that as the sum insured increases, the premium you pay may also increase. This means there are circumstances in which you might want to decline the indexation offer. Speak with your financial adviser about what is best for your personal circumstances.

 

4) Remove any loadings you might have

Personal risk factors such as smoking, dangerous hobbies or occupations, or a high Body Mass Index (BMI) may add what’s called a ‘premium loading’ to your cover – which means you pay a higher premium than someone who doesn’t have those risk factors.

Any loadings like these are recorded on your Policy Schedule. So, if your health improves or your lifestyle has changed recently, get in touch with your financial adviser to review your policy and determine if these loadings can be removed to help lower your premium.

In the end, you’re in control – you can review your cover with your financial adviser and adapt it to your needs.

Stay in control of your policy – book a cover review with your adviser every 12-18 months.

Some advisers offer a review service every 12-24 months, so make sure you enquire about this in order to stay in control of your policy.

Posted in:News  

Many moving parts gauging inflation

Posted on 8 April 2022
Many moving parts gauging inflation

The Reserve Bank of Australia is looking for more clarity on the current state of inflation, having likely accelerated since its last set of forecasts in February.

The central bank left the official cash rate unchanged at a record low 0.1 per cent at Tuesday’s monthly board meeting, but indicated that it is now more concerned about the outlook for inflation.

Economists are now expecting an interest rate rise as early as June.

Annual inflation was already running at 3.5 per cent at the end of last year, but the RBA had previously expected it to edge up to 3.75 per cent by June, holding above its two to three per cent inflation target.

Assistant RBA governor Christopher Kent told a Senate hearing on Wednesday this expected pick-up in inflation was prior to the invasion of Ukraine by Russia.

The war has pushed commodity prices higher, coming alongside supply chain issues impacting manufacturing goods.

There are also potential supply chain issues from China as it struggles to manage a COVID-19 outbreak, while at the same time floods on the Australian east coast have affected food and construction prices.

“There are a lot of moving parts and you have got to take it holistically,” newly promoted deputy RBA governor Michele Bullock told the hearing.

RBA governor Philip Lowe notably dropped the word “patient” in his post-meeting statement on Tuesday, having repeatedly used it in the past in terms of needing to lift interest rates.

He also warned the board will be monitoring the data closely from now on.

Economists expectations for the first rate rise – likely to be a 0.15 per cent increase to 0.25 per cent – are now clustering around the June 7 board meeting.

This would be after the release of the consumer price index for the March quarter on April 27, and the wage price index on May 18 for the same period.

Deutsche Bank Research chief economist Phil O’Donaghoe has brought forward his expectation for the first rate move to June from August and predicts a further three 0.25 per cent increases over the rest of 2022 taking the cash rate to one per cent.

“We pencil in the August, November and December meetings as likely dates for those three subsequent hikes,” he said.

Treasury does not believe government spending in last week’s federal budget will inflame inflation or alter the outlook for interest rates.

The 2022/23 budget papers show the government made $39 billion worth of new spending decisions, which includes an $8.6 billion cost-of-living package.

Luke Yeaman, deputy secretary of Treasury’s macroeconomic group, told senators that given the size of the overall economy, he did not expect this would have a material impact on inflation.

“We don’t believe that level of spending is going to materially change the profile of interest rates,” he told senators on Wednesday.

Treasurer Josh Frydenberg tried to soothe the concerns of voters, saying many households are in a position to absorb a rate rise.

“Australians are about 36 months ahead on mortgage payments if you take into account offset accounts,” he told the Nine Network.

“And what the Reserve Bank said yesterday was that household budgets were in a strong position.”

But Dr Lowe also said “rising prices are putting pressure on household budgets and the floods are causing hardship for many communities”.

Shadow treasurer Jim Chalmers was unsurprisingly not impressed with the treasurer’s comments.

“If Josh Frydenberg doesn’t understand that interest rate rises will hurt and if he thinks that wages growth is strong enough, then he’s even more horrendously out of touch than we feared,” Dr Chalmers told reporters in Brisbane.

Posted in:News  
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