 "Know where you stand: Myths about life insurance")
There’s a common perception that life insurance companies will do everything they can to avoid paying claims.
In fact, 92% of all life insurance claims are paid in the first instance¹. And OnePath Life has paid 93% of claims for policies taken out with a financial adviser during 2018.
As long as you fulfil your duty to take reasonable care not to make a misrepresentation when you apply for cover, and you’re covered for the medical condition you’re claiming for, you should be confident your claim will be paid.
1. www.asic.gov.au/about-asic/news-centre/find-a-media-release/2019-releases/19-070mr-apra-and-asic-publish-world-leading-life-insurance-data/
Life insurance isn’t all about providing for debts and dependents. It’s also about looking after yourself.
Think what would happen if you became ill or disabled and couldn’t work. Would you ask your parents to bear the financial burden? Or would you rather have income protection to help you manage on your own?
There are benefits to applying for life insurance when you’re young and healthy. It’s generally cheaper and it means you don’t have to worry about getting cover later if your health changes (see myth #3).
Once you start your cover, what you are covered under your life insurance for won’t change – even if your health deteriorates.
In fact, you don’t even need to tell your insurer about a change in your health unless you intend to make a claim.
It’s worth noting that for a OneCare Business TPD policy, a change of occupation can alter terms of cover*. Should you change occupation,you will need to notify your insurer and refer to the Product Disclosure Statement and Policy Terms for details.
* OneCare is issued by OnePath Life Limited (OnePath Life) ABN 33 009 657 176, AFSL 238341. OneCare Super is issued by OnePath Custodians Pty Limited ABN 12 048 508 496, AFSL 238246. OnePath Life is not a related body corporate of OnePath Custodians.
We recommend that you read the relevant Product Disclosure Statement available at www.onepath.com.au or by calling 133 667 before deciding whether to acquire, or to continue to hold the product.
Most life insurance products sold through financial advisers required some medical tests before you get covered, but it may be as simple as one blood test and a GP examination.
‘Level premiums’ are designed to save you money over the long term by eliminating the impact of age-based premium increases.
Level premiums are calculated based on your age when the cover started, not at each anniversary, which means premiums are generally averaged out over a number of years. This means your cover is more expensive than‘stepped premiums’ at the beginning of your policy, but generally gets cheaper(relative to stepped premiums) as your policy continues.
It’s important to note that at policy anniversary the premium may still increase (even with level premiums), because age is just one factor that determines your premium. Other factors that impact premium (such as claims trends in Australian population) can result in a repricing of your insurance cover.
When insurers reprice stepped or level premiums, they don’t do it for an individual policy within a specific group unless they do it for every policy in that group.
Many life insurers in Australia have repriced level premiums in the past, so it’s important to talk to your financial adviser or your life insurer to understand your policy as well as any repricing activity that’s recently occurred, so you can make an informed decision. To understand the factors that influence your premium. Learn more here.
Regardless of whether stepped or level premium is selected, premium rates and premium factors are not guaranteed or fixed and insurers have increased premium rates in the past and may increase in the future.
The graph is for illustrative purposes only. This graph illustrates age-based premium increases for stepped against level for all covers. This premium comparison has been calculated, assuming all other factors affecting the premiums are excluded.Both stepped and level premiums can increase due to factors other than age.Premium rates and premium factors are not guaranteed or fixed, and insurers have increased premium rates in the past and may increase in the future. We recommend that you refer to the relevant product disclosure statement and policy documentation, and speak to your financial adviser, to understand other factors affecting your premiums.
Life insurance is designed to change as your life changes, as your cover needs can vary significantly over your lifetime.
Say you take out life insurance when you get married. You may want to increase your cover if you have children or increase your mortgage (learn about increasing your cover via future insurability).
But similarly you may want to reduce your cover if your children have grown up or you’ve paid down your debts.
Your financial adviser can help you work out how much cover you need at any given time, to make sure you’re not paying for any cover you don’t need.
Over 70% of Australian life insurance policies – more than 13.5 million separate policies – are held through superannuation funds*.
While this cover is great to have, many of these policies only provide the minimum level of cover employers have to offer, which isn’t enough for most people.
In fact, Rice Warner estimates that the median level of cover in superannuation meets is only 60% of needs for life cover (or just 38% for families with children), 13% for TPD cover and 17% for income protection.
Basic needs met by life insurance cover in super
*Insurance through superannuation, 2016, www.ricewarner.com/insurance-through-superannuation/
Workers’ compensation provides some protection for work-related accidents or injuries.
But it doesn’t cover any illnesses, nor does it cover anything that happens to you when you’re not at work.
Even if you are covered by workers compensation, the benefits are typically capped in terms of the amount and duration of payments, which means the cover could fall well short of what you really need.
There’s no doubt insuring the breadwinner is vital for any family’s financial security.
But if a non-working or lower income-earning partner became seriously ill or injured, their family would need a lot of assistance.
Imagine a breadwinner had to reduce their working hours to look after their partner or young children, or employ outside help.
Either option could prove very expensive, which is why both members of a couple should consider life insurance – regardless of how much they earn.
| Posted in:News |
 "Govt to scrap earlier tax relief: report")
Andrew Brown
(Australian Associated Press)
Plans to bring forward tax cuts for middle and high income earners to this year’s 2022/23 federal budget could reportedly be shelved.
Treasurer Josh Frydenberg is now unlikely to accelerate the relief by two years and flatten the tax rate for those earning between $45,000 to $200,000 to 30 per cent, The Australian reported on Wednesday.
Citing an unnamed senior government source, the news outlet said Mr Frydenberg plans instead to focus on cost of living pressures, such as rising petrol prices.
Federal Labor has previously committed to backing the so-called stage three tax cuts, which would cost about $17 billion a year, originally due in 2024/25.
Mr Frydenberg is also reportedly considering extending the low and middle income tax offset, which gives an eligible taxpayer an offset of up to $1,080, for another 12 months.
Meanwhile, Australia’s critical mineral sector will be bolstered in the upcoming federal budget with more than $200 million for manufacturing projects.
The government has announced $243 million will be spent across four projects in the sector.
Critical minerals, such as nickel, magnesium and other rare-earth elements, are heavily used in the manufacture of technology such as mobile phones, electric cars and solar panels.
Nearly half of the funding, $119.6 million, will go towards an integrated nickel manganese cobalt battery material refinery hub in Kalgoorlie.
Meanwhile, $49 million will be spent on processing high-grade vanadium from a Western Australian mine and transporting it to a plant powered by clean hydrogen.
There will be $30 million set aside for a rare-earth separation plant in the Northern Territory, the second of its type outside China and the first in Australia.
The fourth package will be $45 million to help construct a high-purity alumina production facility near Gladstone in Queensland to help meet rising demand for lithium-ion batteries and LED lights.
It is expected the four projects will help create more than 3400 jobs.
Prime Minister Scott Morrison said the new initiatives were critical to expanding the critical minerals sector in Australia.
“These projects are about manufacturing the products and materials Australians need, and the world needs, by making them right here at home,” Mr Morrison said.
“We’re helping grow the local critical minerals processing and clean energy industries and locking in the future of those industries by backing manufacturing projects in Australia.”
The critical minerals projects will form part of the federal government’s $1.3 billion modern manufacturing initiative.
Industry Minister Angus Taylor said the projects would mean Australia would capture more of the global supply chain.
He said the initiatives would help address the dominance of China in the area, which is currently responsible for between 70 and 80 per cent of critical mineral production.
“Australia is lucky to have some of the largest reserves of the critical minerals and metals which drive the modern global economy … this initiative is designed to address (China’s) dominance,” he said.
“These projects are not only game changers for the local region with the creation of new jobs – they will also open up incredible export opportunities.”
| Posted in:News |
 "How your investment income is taxed")
Lower tax on your investments can help you reach your financial goals sooner. But don’t choose an investment based on tax benefits alone.
You need to include investment income in your tax return. This includes what you earn in:
You pay tax on investment income at your marginal tax rate.
Use our income tax calculator to find out your marginal tax rate.
You’re allowed tax deductions for the cost of buying, managing and selling an investment. But there are rules around what you can and can’t claim as a tax deduction. See the Australian Taxation Office (ATO)’s investment income deductions.
Investing and tax can be complex. See your accountant for help.
If you sell an investment for more than the cost to acquire it, you make a capital gain. You need to include all capital gains in your tax return in the year you sell the investment. Capital gains are taxed at your marginal rate.
If you’ve held the investment for more than 12 months, you’re only taxed on half of the capital gain. This is known as the capital gains tax (CGT) discount.
The ATO has information to help you work out your capital gains tax on different investments.
If you sell an investment for less than the cost to acquire it, you make a capital loss.
You can use a capital loss to:
Positive gearing is where you borrow money to invest and the income from the investment (for example, rent or dividends) is more than the cost of the investment (interest and other expenses).
If you’re positively geared, you’ll have extra money coming in. But you’ll also have to pay tax on this income at tax time.
Negative gearing is where you borrow to invest and the investment income is less than the cost of the investment.
Investors negatively gear as they can generally claim a tax deduction for the investment loss. The aim is for the capital growth to offset the loss in earlier years.
If you’re making an investment loss, it is still costing you money. You’ll need to have cash from other sources, like your salary, to cover interest and expenses.
A tax-effective investment is one where the tax on your investment income is less than your marginal tax rate.
Choose investments based on your financial goals, risks you’re comfortable with and expected returns. Tax benefits should be a secondary consideration.
Super is a tax-effective investment and one of the best ways to save for retirement. This is because the government provides tax incentives to save through super. These include:
See Tax and super for more information.
Insurance bonds are investments offered by insurance companies. They can be tax effective if you’re planning to invest for 10 years and follow certain rules.
All earnings in an investment bond are taxed at the corporate tax rate of 30%. If no withdrawals are made in the first 10 years, no further tax is payable. They can be tax effective for investors with a marginal tax rate higher than 30%.
Tax-driven schemes offer tax deductions now for investing in assets that may provide income in the future. These schemes can be high risk and some are scams. Check the ATO page investigate before you invest for how to spot a dodgy tax scheme. Or get professional advice from an accountant.
Keeping good records will help you at tax time to:
It will also help you calculate any capital gains or losses when you sell an investment.
For all investments such as shares, property and cryptocurrencies you need to keep records to show:
You’ll need to keep records for five years after you included the income and capital gain or loss in your tax return.
MoneySmart
(ASIC)
| Posted in:News |
 "Trauma insurance, what is it and do I need it?")
Money Smart
(ASIC)
A critical illness or serious injury can make it difficult to continue to work. Trauma insurance can help support you and your family at this time and pay for medical and rehabilitation costs.
Trauma insurance, also called ‘critical illness’ or ‘recovery insurance’ pays a lump sum amount if you suffer a critical illness or serious injury. This includes cancer, a heart condition, major head injury or stroke. Trauma insurance does not cover mental health conditions.
What’s covered under a trauma insurance policy and medical definitions can be different between insurers. To understand what’s covered under a trauma insurance policy, read the product disclosure statement (PDS).
Trauma insurance can be used to help pay for:
When deciding if you need trauma insurance and how much, think about:
If you need help deciding if you need trauma insurance and how much, speak to a financial adviser.
You can buy trauma insurance:
You can choose to buy trauma insurance on its own or packaged with life cover and TPD insurance. If you buy trauma insurance packaged with life cover, your life cover could be reduced by the amount paid out on a trauma claim. To see if this applies to a policy, read the PDS or ask your insurer.
Super funds no longer offer new trauma insurance policies. But if you were in a super fund that offered trauma insurance before July 2014, you might still have it through your super fund. Check your member statement or contact your super fund to find out.
Before buying, renewing or switching insurance, check if the policy will cover you for claims associated with COVID-19.
You can generally choose to pay for trauma insurance with either:
Your choice of stepped or level premiums has a large impact on how much your premiums will cost now and in the future.
Before you buy trauma insurance, compare policies to make sure you get the right one for you. Check:
A cheaper policy may have more exclusions, or it may become more expensive in the future.
Use our Life insurance claims comparison tool
Compare how long different insurers take to pay a trauma insurance claim and the percentage of claims they pay out.
You need to tell your insurer anything that could affect their decision to provide you with trauma insurance. You need to give them this information when you apply, renew or change your insurance.
This can include your:
If an insurer doesn’t ask for your medical history, the policy might have more exclusions or narrower medical definitions.
The information you provide will help the insurer to decide:
It is important that you answer the questions honestly. Providing misleading answers could lead to an insurer to decline a claim you make.
To claim on your trauma insurance, see making a life insurance claim for information on what to do.
| Posted in:News |
 "RBA to stay patient before lifting rates")
Colin Brinsden, AAP Economics and Business Correspondent
(Australian Associated Press)
Reserve Bank governor Philip Lowe does not expect the Omicron variant to derail Australia’s economic recovery but says the central bank board is prepared to remain patient before lifting the cash rate.
As widely expected by economists at the RBA’s first board meeting of the year, it left the cash rate at a record low 0.1 per cent and is ending its multi-billion dollar bond buying program on February 10.
The program aimed to keep market interest rates and borrowing costs low.
“Ceasing purchases under the bond purchase program does not imply a near-term increase in interest rates,” RBA governor Philip Lowe said in a statement after the meeting.
“The board is prepared to be patient as it monitors how the various factors affecting inflation in Australia evolve.”
Economists and financial markets had expected Dr Lowe to provide a more definite outlook for the cash rate after the unemployment rate dropped to 4.2 per cent, a year earlier than the RBA had been predicting, while inflation is also running well ahead of its expectations.
Financial markets have been pricing in the risk of a rise in the cash rate by mid-year, while economists had been gravitating towards a move at the August board meeting.
“As the board has stated previously, it will not increase the cash rate until actual inflation is sustainably within the two to three per cent target range,” Dr Lowe said.
He said while inflation has picked up, it is too early to conclude that it is sustainably within the target band.
“There are uncertainties about how persistent the pick-up in inflation will be as supply-side problems are resolved,” he said.
“Wages growth also remains modest and it is likely to be some time yet before aggregate wages growth is at a rate consistent with inflation being sustainably at target.”
EY chief economist Jo Masters said the RBA board remains a long way from financial market expectations about the timing of the first rate.
“It’s clear that policymakers want to see wages growth accelerate to be confident that inflation will remain within the target band, as supply disruptions fade,” she said.
Key December quarter wages data is due on February 23.
Dr Lowe said the Australian economy remains resilient and spending is expected to pick up as Omicron case numbers trend lower, but he conceded the main source of uncertainty continues to be the pandemic.
The RBA now expects economic growth of around 4.25 per cent over 2022 and two per cent over 2023.
This is lower than the RBA’s central case predicted in November when it had forecast growth of 5.5 per cent and 2.5 per cent respectively.
However, it has upgraded its annual underlying inflation forecasts after the unexpected jump to 2.6 per cent as of the December quarter, predicting 3.25 per cent in coming months before declining to around 2.75 per cent over 2023.
The central bank had previous not expected underlying inflation to hit 2.5 per cent until the end of 2023.
“One source of uncertainty is the persistence of the disruptions to supply chains and distribution networks and their ongoing effects on prices,” Dr Lowe said.
“It is also uncertain how consumption patterns will evolve and how this will affect the balance of supply and demand, and hence prices.”
Dr Lowe will get the opportunity to flesh out his expectations for the outlook when he addresses the National Press Club in Sydney on Wednesday.
The RBA will also release its quarterly statement on monetary policy on Friday which will provide its full suite of forecasts.
| Posted in:News |
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