Month: December 2017

We had a look at life expectancy around the world as we know it today, but now we’d like to dig a little deeper and take a look at life expectancy through the ages.

It’s incredible to see the way in which modern medicine and living habits have altered the length of time that we are expected to live. In 17th Century England, the standard life expectancy was around 35 years. Now, life expectancy in Australia is 80.4 years for Caucasian men, and 84.5 years for Caucasian women. In Australia, we are currently one of the highest ranking in the world for life expectancy.

Considering we’re doing a bit of a deep dive into the history of life throughout the ages, we thought it might be pertinent to do a bit of a dive into the history of life insurance too.

 

History of Life Insurance

Two very enterprising chaps in London, William Talbot and Sir Thomas Allen, must have had a lightbulb moment when they stumbled upon the universal truth that one day, we all shall die. They developed the first modern form of life insurance with the Amicable Society for Perpetual Assistance Office.

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The original plan saw a maximum of 2,000 members paying £7 6s for a policy (around $1,800 AUD) and £6 4s annually (around $1,500 AUD). All members could hold up to three shares, and the premiums collected annually were divided as an ‘amicable contribution’ among the wives and children of members depending on the shares held. Those eligible for a payout were delivered “at an equal rate per share, with only such reserve as is necessary for defraying the charges of management”.

Over time, the system evolved, various other companies were started, and life insurance gradually evolved into what we know it to be today.

So when the Amicable Society and various other life insurers were offering protection for families and beneficiaries in the 18th Century, what sort of life expectancy was expected around then?

 

Life Expectancy Through the Ages

Studies show that if you were born in 1900, you had a pretty good chance of dying by your 50th birthday. Yikes. Things have changed substantially since then thanks to improved health and safety around the world. In our investigation we have found that various nations have different figures available depending on records, and so we’ll offer as much information as possible for each country and nation for each time period.

 

 1500s

We’ve only uncovered data from the United Kingdom here, and they put life expectancy at around 33.94 years of age. But, if you were an aristocrat (and thus had access to things like oh, you know – food and clean water), you were tipped to live a lot longer. If a gentleman in the English aristocracy blew out the candles on their twenty-first birthday cake, they could expect to live until as old as 71.

One particularly memorable case in London has a burial register in Shoreditch that puts one Thomas Cam (or Carn) at a whopping 207 years old. According to Old and New London, ‘the 2 should probably be a 1.’ Still, even by modern standards, 107 is a very good innings – let alone in Reformation England.

 

1600s

Things improved slightly in the 1600s with the average age being 39 years. A potentially dubious claim of longevity was made in 1649 where Thomas Damme of Leighton was recorded as dying at 154 years of age.

 

1700s

Life insurance was invented in the United Kingdom, and people stayed around the 39-year mark for life expectancy. The Irish Famine saw a huge loss of life with around 310,000 – 480,000 people starving due to cold weather affecting their harvests.

 

1800s

During the 1800s the life expectancy began to rise, reaching 48 by the end of the 1800s in the UK, and records beginning in other nations with recorded ages of 36 in Japan, 38 in Germany, and 25 in India.

 

 1900s

Serious record keeping began around the world as the average age rose steeply. Modern medicine got a whole lot better, as women were dying in childbirth less and serious diseases like pneumonia, influenza, tuberculosis, and bronchitis were treated far more effectively. Major incidents like war and famine/disease outbreaks saw population numbers decrease in certain areas – but the average number just kept creeping up. In the 1950s, people could expect to live to 70 in the UK, 67 in Germany, 57.7 in Japan (up from an average of 30 in 1945 after the bombing of Hiroshima), 47 in South Korea, 34 in Ethiopia, and 36 in India.

 

 Today

We see figures continue to rise thanks to modern medicine and lifestyle changes. Yoga has a lot to answer for, and so does kale, probably. Take a look at the ages by country:

• Japan – 83
• Australia – 82
• UK – 81
• Canada – 82
• Singapore – 83
• Italy – 82
• New Zealand – 81

It must be said that in certain regions less developed, life expectancy is still around the 50-year mark, and this is something that as a nation we must all do our best to improve.

If you are looking for life insurance to protect you and your family, please get in touch to find out more about how we can help you or call us for a confidential chat on 1300 366 817.

Many people are put off by life insurance, thinking it’s unnecessary and not worth the cost. But once you get past these common misconceptions, you’ll realise that it’s a valuable investment in many cases.

People get life insurance for several different reasons, but the following are some of the main reasons why life insurance is often an excellent investment:

 

1. Accidents can happen at anytime

One of the top reasons why people get life insurance is to protect themselves (and their families) from accidents and other unforeseen events. For many, this extra protection is more than worth its cost.

 This is admirable because, whether we like it or not, accidents and unfortunate events are a part of life. Perhaps even more worrying: they can happen anytime. The sooner you come to terms with it, the better you can prepare for it.

 Getting the right life insurance will help you better deal with a situation if an unforeseen death does occur. And if such an unfortunate event does happen, you and your family will be better off with proper life insurance than without it.

 

2. Funerals are expensive

Let’s face it: funerals are expensive. Funerals can easily cost in excess of 10 thousand dollars, not to mention all other miscellaneous expenses that burial ceremonies typically incur.

 With the proper life insurance coverage, however, you’ll be able to offset the financial burden of funerals, burial ceremonies, and other obligations that often come with such events. To many, this extra financial assistance for funerals is more than enough to prevent your surviving family members from getting into any financial holes.

 

3. Pay off debts

Life insurance is often used as a source of funds for paying or reducing debts such as mortgages, credit cards, and personal loans. If you or a loved one dies, you or your family will still be able to repay these debts with the right life insurance in place. This prevents surviving members from inheriting a previous debt.

After all, paying big debts is the last thing you want to do after the death of a loved one. But with life insurance, you can help eliminate or, at the very least, reduce this financial burden on you or your loved ones.

 

4. Invest with Greater Confidence

Because life insurance can provide financial support to you and your family in the event of death, you’ll be able to pursue large investments with greater confidence.

Whether you’re getting a mortgage for a new house, starting a business, or paying for your child’s education, you can pursue it with less worry knowing that life insurance can provide financial support in the worst case scenario. To many, life insurance serves as a financial safeguard that protects them and their family’s investment in the case of unforeseen death.

 

5. Pay for ongoing care

Those who’ve been dealing with a terminal illness and receiving ongoing care know how burdensome (emotionally, physically, etc.) it can be to them and their families. Medical bills and care services, meanwhile, are notoriously expensive, and maintenance care alone can quickly dry up a family’s savings.

Life insurance can help pay for ongoing care for you or your loved one. With it, the cost of related medical bills and care services can be substantially reduced. And for those who don’t have enough savings left or whose resources have quickly depleted, life insurance can be the major source of funds for receiving any ongoing care.

 

6. Pay for ongoing living expenses

Moving on from the death of a loved one can be a difficult process. This is true not just personally, but financially as well. This is even more apparent if there’s a family involved and the one who died was the major breadwinner of the family.

The death of family member – especially that of the main breadwinner – can deal a tremendous financial blow to most families. The right life insurance can help pay for ongoing living expenses, household costs, and other financial obligations as the family moves on.

Although life insurance will never be able to replace the presence of a loved one who passed away, it can help surviving members transition to a new life when it comes to financial matters.

 

7. Protect retirement savings

It’s common for most people to save up for retirement and put money aside for later use.

Many, however, find that this isn’t enough to prepare for the future. Serious illness or unexpected death can quickly use up their retirement savings thanks to expensive medical bills, funeral expenses, and other costs that often come with such events.

With the proper life insurance coverage, these expenses can be minimised (sometimes even completely covered), preventing the depletion of your retirement savings.

For those looking to prepare better for the future, getting the right life insurance can be just as important as saving up for retirement.

 

Life Insurance to Protect Your Family’s Future

There’s a saying in the industry that insurance isn’t for the dead; it’s for the living. And that’s definitely true when it comes to life insurance.

What many don’t realise about life insurance is that it’s ultimately not about you; it’s about your loved ones. Life insurance is about protecting your family if you or a loved one dies. It’s making sure they’re protected financially no matter what happens.

Death is difficult enough to move on from; it’s even harder if they have to continue living with the financial burdens caused by your absence. Life insurance is there to help make death less financially burdensome on your family if you’re not there anymore.

If you need more information about how life insurance can protect you and your family in the future, please don’t hesitate to talk with our specialists. We’ll gladly provide any information or advice you may need. We can also provide life insurance comparisons to help you choose the right plan.

There are several alternatives available to you when deciding who should be the owner of your policy. While self-ownership provides the most control, in some instances it may be appropriate to place the cover inside your superannuation fund or your self-managed super fund to access tax benefits or to alleviate pressure on cashflow.

All trustees of an SMSF have a legal obligation to consider insurance for the funds members as part of the fund’s investment strategy. This includes each member’s need for Term Life, Total and Permanent Disability, and Income Protection insurance. The insurance strategy must be regularly reviewed to ensure it is appropriate for the needs of each member; this is a requirement of the Australian Taxation Office, and penalties may apply if this is not evidenced. The evidence can be as straight forward as recording the consideration process to being as complex as documenting a Statement of Advice. Failure to comply with this requirement can result in the trustee’s being fined up to $11,000.

When your insurances are held within your self-managed super fund, your fund is the owner of the policy and pays the policy’s premiums. The premiums are a deductible expense to your fund and this can reduce the overall tax payable on contributions and investment income. If you make concessional contributions into your fund, then you are effectively paying the premium in pre-tax dollars.

Upon payment of the benefit, there are various issues which need to be addressed. The taxation implications upon payments will depend upon the size of the benefit, how it is paid and to whom it is paid. These issues are quite complex and planning is required.

 

Beneficiaries of SMSF Insurance

Where your Term Life insurance is owned by your SMSF, in order for the person you nominate as the beneficiary to receive the benefit tax free, they must be either:

• A dependant (including your current spouse – married or de facto and any natural child of any age). It can also include any other person who can prove a financial dependency.
• Your Legal Personal Representative who is essentially the executor of your estate

Death Benefit payments from an SMSF do not form part of your estate when combined with a valid Binding Death Benefit Nomination. With a valid, binding nomination, the trustee of the fund is bound to pay the proceeds to whoever is nominated (assuming they are a dependant or legal personal representative). This ensures that the policy proceeds are distributed in accordance with your wishes. Note: this is only the case where the nomination remains valid.

In the absence of a valid Binding Death Benefit Nomination, the trustee of your superannuation fund will have the discretion as to who receives the proceeds of your policy. While they will generally take any non-binding nomination into account, there is no guarantee that they will act in accordance with your wishes.

If your death benefit is paid to someone other than a dependant or your Legal Personal Representative, then there may be taxation payable on receipt of the benefit.

Limitations of Insurance Inside Your SMSF

Where your Total and Permanent Disability insurance is held within your SMSF, under superannuation legislation you may only have TPD cover with an Any Occupation definition. Today, many retail insurers offer you the option to have a “split” policy which has a linked Own Occupation component of cover held outside your SMSF and paid by you personally.

Accessing TPD benefits paid to your SMSF will incur an element of taxation on the benefits you receive. The TPD benefit paid to the fund must be paid to you personally and cannot be paid to any other members of the fund.

You can also own your Income Protection insurance within your Self-Managed Super Fund. Similarly, payments of the premiums are a deductible expense to the fund and if you make concessional contributions into you fund you are effectively paying the premium in pre tax dollars. Having said this, if you were to own the policy personally, the premiums are tax deductible to you.

Important Considerations

Whilst there is the additional advantage of alleviating pressure on your cashflow by holding your Income Protection cover in your SMSF, subject to your personal circumstances it may be more beneficial to own the policy personally due to the vast disadvantages of owning it within a super fund:

A more complex claims process – When making an income protection claim you will be required to first have the claim processed by the insurance company and then also by the super fund itself. Trustees of superfunds have an obligation to ensure that all funds released from super satisfy a condition of release. The Superannuation Industry Supervision Act (SIS Act) states that in order for a member to receive a replacement income stream from super, they will need to satisfy the temporary incapacity condition of release. This is contrasted with a policy held outside of super where a claimant simply has to meet the insurer’s requirements.

A simpler, less comprehensive product – Superannuation legislation states that income protection held inside super is only able to offer protection against a defined loss in income. In order to access the various additional benefits present in high quality Income Protection products owned outside of the superannuation environment, some retail insurers offer a “split” policy that will enable you to receive these benefits under a linked policy held personally. The benefits that you cannot be paid under a policy held in your SMSF include a trauma benefit (pays you a lump sum upon being diagnosed with one of a number of diseases) and a specific injuries benefit (pays you a lump sum should you suffer one of a number of injuries).

Indemnity contracts – Income protection held inside an SMSF can only be an indemnity style policy. What this means is that, at the time of claim, you will have to prove to the insurer that immediately prior to disability, you were earning sufficient income to justify your monthly benefit. This presents a significant hazard if you are self-employed and your income fluctuates or if, for any reason, you are earning less money than you were when you set up the policy.

Preventing payments of other insurance policies – If you have Total and Permanent Disability insurance owned inside your super fund as well as your Income Protection insurance, in the event of a total disability, you cannot claim on both your Income Protection policy and your Total and Permanent Disability policy. As previously stated, due to the SIS Act, one of the conditions of release for Income Protection is temporary incapacity; and as you cannot be temporarily incapacitated and permanently incapacitated at the same time, you cannot claim on both of the insurance policies.

It’s important to carefully consider all the pros, cons and tax implications of insurance options before deciding whether or not to have cover in your super fund. At the end of the day, it’s different for everyone and comes down to determining what’s best for you.

Advertisements for “no medical” life insurance policies are hard to miss – you’ll notice them on billboards, the radio and daytime TV all year-round. People who are squeamish about visiting a GP can be tempted to opt for coverage that doesn’t require a medical examination. However, getting a life insurance policy that does require a medical may save you a lot of money in the long run, as no-examination policies often have higher premiums because they’re considered riskier for insurers to provide.

If you’re deciding whether or not to apply for a policy that requires a visit to the doctor, read on. You’ll quickly see that a life insurance medical examination isn’t that scary, complicated or invasive!

 

What You Can Expect from Your Life Insurance Medical Examination

The type and intensity of the medical examination your insurer will need you to undertake will depend on both your personal details (age, gender etc.) and your insurer’s underwriting policies.

Applying for a policy that requires a medical usually involves two steps:

 

1. A pre-medical questionnaire: This will include questions about you and your family’s medical histories, as well as your lifestyle (smoking, drinking, diet, exercise routines etc.). Sometimes you’ll need to take paperwork home and fill it out, and sometimes this will just be a verbal questionnaire that the doctor goes through with you before your examination. If you’ve ever been to a specialist, it’s a good idea to request a copy of your medical records to help you fill out your pre-medical questionnaire with as much detail as possible.
2. Your medical examination: A basic medical examination is as simple as a check of your height, weight, pulse and blood pressure. If your answers to the pre-medical questionnaire flag certain risk factors, you may also have to take additional tests. The most common form of insurance medical takes no more than 15 minutes and is conducted by a nurse.

 

Your medical will either be conducted by a nurse or if you have a full examination, a doctor. Some insurers will want you to be examined by their doctors, while others are happy to have your GP do this part of the application.

 

Everything You Need to Know About Additional Tests

There are three types of additional tests that insurers might ask for:

1. Blood tests: You might be asked to take a blood test to check your cholesterol, glucose, protein and HIV status, or to test for other conditions that you present a high risk of developing. You may have to fast for 6-12 hours before having a blood test.
2. Urine tests: These are usually to check for HIV, proteins, glucose, drugs and alcohol or other conditions you’re at risk of having. Your doctor will let you know if you need to fast before this test and if it needs to be carried out at a particular time of day.
3. Stress ECG: Applicants that present a high risk of heart conditions are sometimes asked to do an exercise stress test. This involves walking or running on a treadmill while your heart’s response is examined. Don’t worry though; you’ll be given plenty of warning if you need to have a stress ECG done and this simple test can save you money on your premiums if no issues are uncovered.

 

Learn More About Life Insurance Medical Examinations

If you’re looking for life insurance and want information on what Australia’s leading insurer’s medical examination requirements are, get in touch with Cover Australia today. Our friendly team of experts are here to take your questions and walk you through different insurer’s application processes so that you’ll always know what to expect. Dial 1300 366 817 or click ‘Get a Quote’ now to reach someone who can help you make the best decisions about your life insurance needs.