adviser logo your best back-up tool is insurance. insurance for tradespeople presented by michael...
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Adviser logo
Your best back-up tool is insurance.
Insurance for tradespeople
Presented by Michael Goggan as Authorised Representative no. 325436 for Australian Capital Financial Planning Pty Ltd,
ABN 34 122 486 935, AFSL 380552
16/07/2015
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Important information» This material is not intended to constitute personal advice and must not be relied upon
as such.
» This material is of a general nature only and has been prepared without taking into account your individual objectives, financial situation or needs. Before making a decision based on this material, you should consider the appropriateness of this material having regard to your objectives, financial situation and needs and consider obtaining independent advice from a licensed financial adviser.
» We recommend that you refer to the relevant Product Disclosure Statement where reference is made to a particular product before taking any action.
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About me
» Michael Goggan
» Licensed Financial Adviser
» ACF Planning Pty Ltd
» 89 Sydney Street Mackay Qld
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Agenda» Why do you need insurance?
» What cover do you need?
» Strategies to make insurance more affordable
» The real benefits to you
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Insurance - why do you need it?
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Why you need insurance It could happen» You probably know someone who’s been affected by
sudden illness or injury
» Illness like cancer can strike at any age
» The costs of treatment can be financially crippling
» How far does workers compensation go?
* Cancer Council of NSW media release - 6 April 2007.
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Why you need insurance It does happen» Tradespeople are three times more likely to suffer
work-related injuries than any other occupation1
» The average person has $189,000 of life insurance cover. The average needed is $431,000
» Heart disease is also the number one cause of death in Australia followed by stroke and cancer3
1. Key Work Health & Safety Statistics Australia, 2010
2. ‘Source: Value proposition of financial advisory network – Update and extension. KPMG / Econ Tech January 2011
3. ‘Causes of death, Australia 2010’ Australian Bureau of Statistics
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Why you need insurance What are the reasons tradespeople claim?
Source: Income protection claims received by Asteron Life in 2011
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Why you need insurance Could your family survive without you? In the short term:
– Could you pay the bills with only one income?– Could you afford to get someone in to help at home?– Could you pay expensive medical bills?
In the long term:– Could you maintain the mortgage?– Could you maintain your family’s lifestyle?– How long would your savings last?
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What cover do you need?
Insurance for tradespeople
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What cover do you need?
Insurance for tradespeople» Replace your income - on a temporary or permanent
basis
» Debt protection to repay outstanding personal debt
» Keep on top of your fixed business expenses
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What cover do you need?
The types of insurance» Income protection provides regular payments to replace your
income if you’re unable to work due to illness or injury
» Trauma provides a lump sum to help cover medical costs and extra household expenses
» Life Cover and Total & Permanent Disability (TPD) provides a lump sum to help replace your long-term income, pay for help at home, and cover your debts
» Business Expenses insurance pays regular payments to cover fixed business expenses – like rent and professional insurances
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What cover do you need?
Case study: Life cover» Frank - 38 year old electrician
» Has a wife who stays at home to look after their children aged 1 and 3.
» Suffered a bad fall whilst helping his friend wire his shed one weekend and couldn’t work for three months.
» Frank received re-habilitation, and 80% of his income to cover expenses.
Source: Asteron Life
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What cover do you need?
Case study: Life, Trauma & TPD» Karen - 38 year old plumber
» Diagnosed with breast cancer, received $500,000 from her Trauma cover
» When she could no longer work, she received $1.5m from his TPD cover
» When she became terminally ill, she received $1.5m from her Life cover
Source: Asteron Life
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What cover do you need?
How much does it cost?» Glen, a 31 year old carpenter on $60,000 pa, wants
to cover his mortgage and income:– $750,000 Life Cover – $3,750 per month Income Protection (tax-deductible)
» His annual premium is $2034* (after tax) or around $39.10 per week
Source: Asteron Life, based on a non-smoker taking out an Agreed Value Income Protection Plus Cover with a 30-day waiting period, age 65 benefit period and a Life Cover, both with stepped premiums paid annually. * Not including Medicare levy.
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Making insurance more affordable
» Premiums for income protection are generally tax-deductible
» Life and TPD cover may be available in your super fund - this can reduce the effective cost
» You may be able to use spouse super contributions to pay your premiums
» If you can’t afford comprehensive cover, you can cover yourself for accidental injury only.
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Case studies
Making insurance more affordable
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Making insurance more affordable
Salary sacrificing into super» Take out insurance inside super, and use pre-tax money to pay
your premiums
How it works: » Your insurance premium = $2,930 pa
» Strategy: You salary sacrifice $2,930 pa into super
» Income to pay this premium outside super (MTR 38.5%) = $4,764
» Saving from this strategy (year 1) = $1,834
Source: Asteron Life
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Making insurance more affordable
Spouse contribution splitting» You salary sacrifice into their super, then ‘split’ this amount to
your spouse’s super fund to pay their insurance premiums
How it works: » Your spouse’s insurance premium = $2,500 pa
» You salary sacrifice $2,941 into your super
» You split 85% of this amount ($2,500) into your spouse’s super
» Your saving in tax (year 1) = $ 1,132 *
Source: Asteron Life
* Marginal tax rate at 46.5%
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Making insurance more affordable
Taking insurance inside super» There may be different rules for insurance
inside super
» You should discuss these strategies in relation to your own circumstances.
» You may find you’re better off taking insurance outside super
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The real benefits to you
» Peace of mind
» Financial security for your family
» Lifestyle choices for you and your family - you decide what happens in the future
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Next steps
» Think about everything you need to protect
» Find out how much insurance you currently have
» If you have a spouse, talk to them about their insurance
» Make an appointment to meet with an adviser @
» Australian Capital Financial P: 07 49 577 191 E: [email protected]
