Posts

Busting Personal Insurance Myths

/in /by

If you apply for a ‘no medical and no blood test’ personal insurance, don’t assume you will be covered for any medical condition you already have.  Pre-existing health problems are generally excluded in the fine print of a personal insurance policy.  However, you might not find this out until years later at the time of a claim.

The advertising makes it sound so simple and convenient, but if there’s no health assessment and very few questions up front, it usually means that enquiries will be made when it comes time to make a claim.

Whether you realise or not, your signature on an insurance application generally gives the insurer written permission to access your medical records, including reasons for GP, specialist and hospital visits; and also your history of Medicare claims.

Meanwhile, you may be paying for years of cover that you have no chance of claiming on.

There are two important points about personal insurance worth making here.  Firstly, very few people are ever asked to undergo a full medical for insurance.  The reason is simple; the insurer has to pay for it.  A blood test is more common and if deemed necessary, the insurer pays for it and simply sends a nurse to your home or work at your convenience.

Secondly, the purpose of underwriting (i.e. asking lots of questions up front and maybe having a blood test) is to work out what you can be covered for, which significantly increases your certainty of being paid a claim.  It also ensures you pay only what you have to.

Arranging insurance through a reputable licensed adviser is not as scary as you may think.  They will assess your situation and recommend what you need.  That’s not a bad thing because they will often highlight issues you may not have thought about.  You simply buy what you can afford.

There are some very good insurance advisers in our local community and you will know where you stand with your insurance from the start.

You are welcome to contact me for a referral to a good insurance adviser or a second opinion on advice you have received.

Cheers

Gary

insurance in super

Do You Have Insurance in your Super Fund? Have a Closer Look!

/in /by

insurance in superIf you have retail super, industry super, corporate super or you are in a large public fund, then read on because this applies to you.

There are benefits in arranging your life insurance through super, and they are mostly related to lower cost and budget affordability:

  • The cost of the cover is often cheaper because super funds purchase insurance policies in bulk and some funds pass back the benefit of the tax deductions they receive for premiums as a discount
  • Insurance through your super can be tax-effective because premiums are paid from your super account, which is pre-tax income, not your after-tax salary or wage income
  • You can have a basic level of cover for you and your family, even if money is tight
  • It is easy to manage because premiums are automatically deducted from your super account
  • Some funds automatically accept you for cover without requiring a health check

 

However, the greatest misconception is that insurance cover acquired through your super fund is free, particularly if you receive it automatically when you join.  This is definitely not the case.  Insurance through your super fund stills cost money, whether you asked for it or not.

The major limitation of insurance in superannuation is that only (a) life insurance (b) ‘any occupation’ TPD and (c) basic salary continuance insurance are available.   This is because superannuation law governs what is and what is not allowed in super.

The policies that you CANNOT arrange through your super are:

  • Trauma insurance
  • ‘Own occupation’ TPD
  • Agreed value Income Protection with benefits to age 65, plus choice of ancillary benefits. Generally only indemnity style policies with a 2-year benefit period are available
  • Any policy on a ‘level premium’ Only ‘stepped premium’ is available in super

AND

There are several other issues that you also need to be aware of if you are arranging insurance through your superannuation.  These include:

  • Insurance arranged through your superannuation is not owned by you. It is owned by the trustee of your super fund on your behalf
  • The level of cover available through super is often limited. What you receive automatically (as opposed to what you arrange yourself) could be well short of what you need
  • There are some severe restrictions on when, how much, and for how long salary continuance payments can be made to you if you are temporarily disabled and unable to work
  • If you move to a different super fund or your employer’s super contributions stop, your cover will likely terminate. This is not a problem if you hold your insurance outside super.
  • If you have more than one super fund with money in them, you may be paying for insurance in each fund, which may be an unnecessary cost
  • If you do not make a Binding Death Benefit Nomination, or your super fund does not offer binding nominations (many don’t), the trustee of your fund will decide who gets your benefits when you die, and it could be a lengthy and frustrating process. None of this is a problem if your hold your insurance outside superannuation.
  • In some circumstances lump sum benefits can be taxable.

This last point is a biggie!  Here’s why:

  • If you are paid a permanent disability (TPD) payment under 60 years of age, the benefit could be taxable.
  • If you die and your life insurance is paid to someone who is not a defined ‘dependant’ for tax purposes (the most common example is adult children), there could be significant tax implications

Generally, lump sum insurance benefits (life, TPD & Trauma insurance) are tax-free if held outside super.

So here is a tip if you already have, or are considering insurance in your super fund:

  • Consider topping up your super to cover the cost of the insurance premiums so your retirement nest egg is preserved and continues to grow over time. Remember that stepped premiums will rise each year, so your ‘top up’ needs to be reviewed annually.  If the additional contributions are the ‘non-concessional’ type (i.e. after-tax money), you may be eligible for the Government Co-Contribution Payment if your income is in the appropriate range.

General advice warning

The article above is general advice only designed to educate and heighten awareness of superannuation issues. It should not be regarded as personal advice because it does not take into account your personal circumstances, financial situation or specific goals. For personal advice that is tailored to your needs, please call me or consult a licensed financial adviser.

picture of Gary Weigh and GW Logo

Welcome to my financial planning & business planning Australia blog

/in , , , , /by

business coaching Brisbane7 Handy hints for personal insurance

  1. Be careful buying personal insurance without advice; some cheap life insurance policies pay only if you die by accident (only about 20% of deaths are caused by accident)
  2. Unless you are personally underwritten when you apply, do not assume you are covered for pre-existing medical conditions
  3. ‘No medicals’ insurance could mean that the insurer starts asking questions to determine payment (if any) when you make a claim
  4. It is a myth that applying for insurance means having a medical. Most people are insured on the basis of their medical disclosure in the application and a report from their family doctor (you give written permission for the insurer to write to your doctor in the application form)
  5. If an insurance company wants any medical testing done (commonly a blood test if anything) they will pay for it and will arrange to send a medical professional to your door at your convenience
  6. Never assume you are uninsurable.  An insurance underwriter may exclude some insurance but not all; or exclude certain pre-existing conditions; or increase the premium to reflect higher risk
  7. If you are thinking insurance, think trauma insurance because suffering a serious illness (e.g. heart attack, bypass surgery, cancer, stroke) is statistically your most likely health event

 A good adviser will tell you what is in the fine print.  Personal underwriting and truthful disclosure when you apply is the way to guarantee you will be paid at claim time.

Call me direct on 0408 756 531 or email gary@garyweigh.com

For more helpful financial & business planning Australia information, check out our financial planning services

Are you pricing yourself out of business?

/in , , , , /by

Gary WeighBusiness Coaching Brisbane – An Expert Fix

I visited a new client recently.  His business was building company websites.  He wondered why he wasn’t getting ahead even though he and his staff were reasonably busy.  There were a few problems but his pricing was such that at full capacity his gross margin couldn’t cover his fixed costs.  That means the more work he did, the more money he lost.  Who would have thought?

I know that all this ‘margins’ and ‘fixed costs’ stuff all sounds like accountant ‘gobbly-gook’ speak but this problem has been sending many enterprising business owners to the wall for thousands of years.

Mis-pricing is a common trap for many inexperienced business owners.  If you over-price, customers will buy from your competitors if you have nothing else to retain them.  Under-price and your profit (and your business) could be non-existent.

It is the one critically important variable you must get right to be competitive, make a profit and stay in business.  Common pricing mistakes include:

  • Following rules of thumb
  • Comparing with competitors and discounting by 10%
  • Not taking into account the unique cost structure of your business
  • Not taking into account your own time when considering cost price
  • Not pricing to a target volume at a target gross profit margin

Good financial management skills are never needed more than when you are determining the cost prices and selling prices of your products and services.   If you need help give me a call.  Coaching is an investment in the future profitability of your business.  CHECK OUT OUR SERVICES   SIGN UP NOW

Did you know that GARY WEIGH & ASSOCIATES  is not only a leading business coaching Brisbane company but also a leading financial planning firm (authorised representative of The FinancialLink Group Pty Ltd) specialising in retail & self managed superannuation advice and personal protection insurance advice?

Come back and tell me I’m wrong

/in , , , , /by

Business coaching Brisbane

With few exceptions, staying alive is what all of us on Earth want.  It stems from our basic survival instinct.  Our need to survive is hard-wired into our primal being.  But most of us want more than that.  We want quality of life; a more complete enjoyment of our time alive.

Quality of life has many dimensions and generally, it has to be worked at.  Although it is a very subjective and personal concept, there are some common elements, including:

  • A good home
  • Love and companionship
  • Good health & vitality
  • Safety & security
  • Happiness and fun
  • Financial prosperity

In Western society there is no doubt that financial prosperity underpins a quality life.  Although money is not everything, it does provide the means for basic subsistence and discretionary choices.   For example money provides opportunity for higher education and a wider range of repair options for damaged health.

One of the certainties of life is that things will go wrong from time to time.  Whilst we all hope it doesn’t happen to us, it is foolish not to be prepared for the worst case scenario.

From my own experience I can say with certainty that, when something goes wrong, it can be severe and there is very little warning.  One day you’re healthy, next day you’re not.  As my wife so eloquently phrases it, “A rooster one day, a feather duster the next!”

When the good health and vitality we have taken for granted for so long finally breaks down, life can change suddenly.  We are forced into alternatives.  Quality of life quickly reverts to survival mode.  For most people, a reversion to survival mode means trying very hard to stay alive whilst finding the money to live.

On top of that, medical bills can be quite draining even with comprehensive health insurance.   You don’t realise until surgery time that Medicare and top hospital insurance between them will still only cover up to the AMA recommended fee.  Many specialists charge above this level and impose non-reimbursable charges such as booking fees.  It also adds to the out of pocket costs when the help most needed cannot be found locally.

Regardless of whether the afflicted person is the breadwinner or not, the family focus immediately narrows onto saving the life or health of one of its own.  Priorities change overnight!  That which seemed important yesterday becomes totally irrelevant today.

The financial problem that most people face is that there is very little spare money to fight the battle ahead.  The bank account is usually a few thousand dollars at best.   After that, credit cards are maxed out, investments are sold down, personal loans are arranged or money drawn against the home equity.

Not only does financial prosperity come to a grinding halt, it actually goes backwards.

I have never been able to work out why our first instinct is to insure our house, car and boat, all of which are inert and replaceable, ahead of ourselves.  Apparently we can’t live without them, but we instinctively baulk at purchasing a safety net for our family.

Whatever you think about insurance – “Waste of money, premiums to high, or nothing will happen to me”, personal risk insurance serves one purpose and one purpose only.  It provides a war chest of money for those times when life deals one of its unexpected and devastating blows.

So when it happens to you, come back and tell me I’m wrong!

Gary

Business coaching Brisbane

Follow @MyProsperityFor

You must check out this website!

/in , , , , /by

 

MyProsperityForum is one of the most innovative websites ever.  If you are interested in your own prosperity, you can join the forum and ask questions about anything to do with personal finances or business planning.  This includes budgets, debt, investment, insurance, superannuation, retirement, insurance, or even starting a business income.

The beauty of this forum is there is not the usual product push or pressure to fork out money for a financial plan.  It is a safe place to find out how to get ahead financially; and there is always a financial planning expert on hand to answer your questions and guide you.  This site is perfect if you’re a DIY, don’t want to spend lots of money, or if you just want to learn to be better with money.  There is even a private message service if you want to ask a silly question.

There are heaps of great articles already posted in the forum.  To name just a few:

  • The ugly truth about ‘no medicals’ life insurance
  • Improve your personal finances – 10 ways to get started
  • The power of a good risk insurance adviser
  • Putting money away for the kids
  • My top 10 tips for a prosperous retirement

Just in case you don’t get enough value from having a financial expert to yourself and reading the plain English articles, there is also a 220-page e-book called “Recession Riches and Wealth”.

I strongly recommend you check out this unique forum www.myprosperityforum.com