Author: admin

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.

As we grow older, it’s inevitable that our lives will change. Nothing stays the same and neither should your insurance. Your life insurance should reflect your lifestyle, cover your expenses and the payout should be available to the people in your life who need it the most.

So with this in mind, we can all agree that life insurance cover should never stay the same for the entirety of our lives, but how exactly does our need for insurance change over time? In this article, we will explain why you will need life insurance at each stage of your life, why you should be making changes to your policy as you get older, and how it can be done.

 

Growing Older

When you’re young, fit and healthy with not a care in the world, life insurance is probably the last thing on your mind. But as you grow older and your health deteriorates, your priorities start to change. You won’t be alive forever, and you start to ask yourself what you’ll be leaving for your loved ones after you’re gone.

As adulthood creeps upon you, and you continue to spend the money you earn, and debts begin to pile up, who’s going to pay off your debts and mortgage when you pass away? With the right insurance cover, your debts will be taken care of. Even if you’re single and have no dependants, taking out a life insurance policy could significantly help your family if you passed away.

 

Earning More Money

If you’re making more money thanks to a recent promotion or career change, you have probably adjusted your lifestyle to suit your larger paycheck. Because you now have more money at your disposal, you will probably buy a bigger house, purchase a more expensive car or send your kids to a private school.

If you already have life insurance or income protection insurance in place, will it cover the expensive lifestyle you now lead? If not, it might be time to update your insurance details to reflect current earnings and living costs.

 

Getting Married and Buying a House

 Having that special someone in your life opens your world up to new possibilities, and it also means you have another person in your life to look after other than yourself. If you already have life insurance in place, you’ll probably want to make your partner the beneficiary of your policy.

Things begin to get more complex when a house comes into the equation. If you and your spouse decide to buy a house together, both of you are likely to contribute towards the repayments. But how would your partner pay off the mortgage on their own if you were to pass away?

This is why buying a house is one of the major reasons why couples decide to take out life insurance; to ensure neither partner is left with the burden of paying off a mortgage. Thanks to the money they receive from the life insurance handout, they should have enough money to get by.

 

Having Children

 Once children are brought into your world, your priorities shift in more ways than one. You want to protect your kids more than anything and taking out life insurance has to be one of the best ways to do that. This is especially the case for households that rely on one income.

Raising children is an expensive exercise at the best of times but if you lose your sole income earner, keeping up with expenses can be near impossible. That’s why your current insurance needs to be updated to cover the extra costs that come with having kids such as school fees and additional living expenses required to keep your family happy and healthy.

The death of a parent is a hard thing to overcome, and this is especially so if life insurance is not in place. If you haven’t taken the plunge into life insurance yet, now is the time to do it. With cover in place, you can trust that your children will still be looked after financially if you do pass away unexpectedly.

You should also make sure your children are listed as beneficiaries in case both you and your partner were to pass away.

 

Getting Divorced

 If a relationship falls apart, divorce is often the unfortunate result. Both of your lives will head in different directions, and you will be settling into single life again, separated from the commitment and obligations that go along with marriage.

If you do ever get divorced, you will probably want to remove your ex-spouse as a beneficiary from your life insurance policy. Your expenses are also likely to change, so make sure this is factored in and changes are made to your policy if needed so you get adequate cover for your new circumstances.

 

Retirement

Once you reach retirement age, your kids have probably moved out of home, which cuts out a significant expense in your life. Many retirees may also own their property outright or choose to downsize their home or move to a retirement village which also saves on costs.

With all of this cost-cutting in your life, your need for life insurance is likely to decrease dramatically. You will probably want to make changes to your policy to equate for your lower living expenses. If you can afford it, you could choose to keep your life insurance as is to cover estate taxes, general living expenses for your partner and you could even have money left over to give to charity.

 

Why You Should Review Your Life Insurance Policy

If you don’t already have life insurance in place, all of these life stages will probably encourage you to consider it. Once you finally decide to purchase life insurance, it should then be reviewed whenever you experience any significant lifestyle changes.

Your life insurance needs will always fluctuate so you have to adapt. If you have too much cover, you risk paying too much money for a policy that is too excessive for your needs. And if your policy is not up to scratch, you risk having a payout that does not cover your expenses.

The biggest reason to review your life insurance policy is to save money. Take some time out of your busy schedule to look at the features in your policy and whether all of those extras are still needed. If there is anything that no longer needs to be included, take them out and your premium will likely reduce. Same goes with reducing your overall cover amount.

The other major reason to review your policy is to make sure you are not under-insured. You may need to add on some extras and features to cover any additional expenses, or you may wish to include other beneficiaries into your policy. The premium is likely to rise, but at least you know you will have adequate cover.

So whenever you reach any of the milestones mentioned above, remember to take the opportunity to review your cover and make changes where you see fit.

 

Making Changes to Your Insurance is Easier than You Think

Whenever you hit a new milestone in your life, whether it be getting a promotion, buying a house or having kids, it’s worthwhile reviewing your current cover to see if it still meets your needs. And luckily, it’s actually pretty easy to do it.

Reviewing your life insurance is as simple as calling your insurance provider over the phone to ask for details about your policy. Alternatively, if you took out cover through us at Cover Australia, you can contact us for expert advice and assistance for the life of your policy. We can also help you renew and make changes to your policy when needed. Just give us a call on 1300 366 817 to discuss any recent lifestyle changes and we can make sure you are fully covered.

Do keep in mind that any changes made to your policy are likely to affect your premium.

The areas of your policy you should be reviewing include:

• Basics of your policy
• Coverage amount
• Policy restrictions
• Policy benefits

Reviewing your life insurance also gives you a chance to shop around and see if another insurance company can offer the right level of cover at a more affordable price. It’s as easy as visiting our website to compare insurers quickly and easily.

As we grow older, it’s inevitable that our lives will change. Nothing stays the same and neither should your insurance. Your life insurance should reflect your lifestyle, cover your expenses and the payout should be available to the people in your life who need it the most.

So with this in mind, we can all agree that life insurance cover should never stay the same for the entirety of our lives, but how exactly does our need for insurance change over time? In this article, we will explain why you will need life insurance at each stage of your life, why you should be making changes to your policy as you get older, and how it can be done.

 

Growing Older

When you’re young, fit and healthy with not a care in the world, life insurance is probably the last thing on your mind. But as you grow older and your health deteriorates, your priorities start to change. You won’t be alive forever, and you start to ask yourself what you’ll be leaving for your loved ones after you’re gone.

As adulthood creeps upon you, and you continue to spend the money you earn, and debts begin to pile up, who’s going to pay off your debts and mortgage when you pass away? With the right insurance cover, your debts will be taken care of. Even if you’re single and have no dependants, taking out a life insurance policy could significantly help your family if you passed away.

 

Earning More Money

If you’re making more money thanks to a recent promotion or career change, you have probably adjusted your lifestyle to suit your larger paycheck. Because you now have more money at your disposal, you will probably buy a bigger house, purchase a more expensive car or send your kids to a private school.

If you already have life insurance or income protection insurance in place, will it cover the expensive lifestyle you now lead? If not, it might be time to update your insurance details to reflect current earnings and living costs.

 

Getting Married and Buying a House

Having that special someone in your life opens your world up to new possibilities, and it also means you have another person in your life to look after other than yourself. If you already have life insurance in place, you’ll probably want to make your partner the beneficiary of your policy.

Things begin to get more complex when a house comes into the equation. If you and your spouse decide to buy a house together, both of you are likely to contribute towards the repayments. But how would your partner pay off the mortgage on their own if you were to pass away?

This is why buying a house is one of the major reasons why couples decide to take out life insurance; to ensure neither partner is left with the burden of paying off a mortgage. Thanks to the money they receive from the life insurance handout, they should have enough money to get by.

 

Having Children

Once children are brought into your world, your priorities shift in more ways than one. You want to protect your kids more than anything and taking out life insurance has to be one of the best ways to do that. This is especially the case for households that rely on one income.

Raising children is an expensive exercise at the best of times but if you lose your sole income earner, keeping up with expenses can be near impossible. That’s why your current insurance needs to be updated to cover the extra costs that come with having kids such as school fees and additional living expenses required to keep your family happy and healthy.

The death of a parent is a hard thing to overcome, and this is especially so if life insurance is not in place. If you haven’t taken the plunge into life insurance yet, now is the time to do it. With cover in place, you can trust that your children will still be looked after financially if you do pass away unexpectedly.

You should also make sure your children are listed as beneficiaries in case both you and your partner were to pass away.

 

Getting Divorced

If a relationship falls apart, divorce is often the unfortunate result. Both of your lives will head in different directions, and you will be settling into single life again, separated from the commitment and obligations that go along with marriage.

If you do ever get divorced, you will probably want to remove your ex-spouse as a beneficiary from your life insurance policy. Your expenses are also likely to change, so make sure this is factored in and changes are made to your policy if needed so you get adequate cover for your new circumstances.

 

Retirement

Once you reach retirement age, your kids have probably moved out of home, which cuts out a significant expense in your life. Many retirees may also own their property outright or choose to downsize their home or move to a retirement village which also saves on costs.

With all of this cost-cutting in your life, your need for life insurance is likely to decrease dramatically. You will probably want to make changes to your policy to equate for your lower living expenses. If you can afford it, you could choose to keep your life insurance as is to cover estate taxes, general living expenses for your partner and you could even have money left over to give to charity.

 

Why You Should Review Your Life Insurance Policy

If you don’t already have life insurance in place, all of these life stages will probably encourage you to consider it. Once you finally decide to purchase life insurance, it should then be reviewed whenever you experience any significant lifestyle changes.

Your life insurance needs will always fluctuate so you have to adapt. If you have too much cover, you risk paying too much money for a policy that is too excessive for your needs. And if your policy is not up to scratch, you risk having a payout that does not cover your expenses.

The biggest reason to review your life insurance policy is to save money. Take some time out of your busy schedule to look at the features in your policy and whether all of those extras are still needed. If there is anything that no longer needs to be included, take them out and your premium will likely reduce. Same goes with reducing your overall cover amount.

The other major reason to review your policy is to make sure you are not under-insured. You may need to add on some extras and features to cover any additional expenses, or you may wish to include other beneficiaries into your policy. The premium is likely to rise, but at least you know you will have adequate cover.

So whenever you reach any of the milestones mentioned above, remember to take the opportunity to review your cover and make changes where you see fit.

 

Making Changes to Your Insurance is Easier than You Think

Whenever you hit a new milestone in your life, whether it be getting a promotion, buying a house or having kids, it’s worthwhile reviewing your current cover to see if it still meets your needs. And luckily, it’s actually pretty easy to do it.

Reviewing your life insurance is as simple as calling your insurance provider over the phone to ask for details about your policy. Alternatively, if you took out cover through us at Cover Australia, you can contact us for unbiased advice and assistance for the life of your policy. We can also help you renew and make changes to your policy when needed. Just give us a call on 1300 366 817 to discuss any recent lifestyle changes and we can make sure you are fully covered.

Do keep in mind that any changes made to your policy are likely to affect your premium.

The areas of your policy you should be reviewing include:

• Basics of your policy
• Coverage amount
• Policy restrictions
• Policy benefits

Reviewing your life insurance also gives you a chance to shop around and see if another insurance company can offer the right level of cover at a more affordable price. It’s as easy as visiting our website to compare insurers quickly and easily.

In 2016, with so much health advice constantly circulating and ready to be plucked out of cyberspace with a thumb and a smartphone, it can be difficult to know what to believe. Often, it seems like you can “scientifically” justify any health and fitness choice as long as you search hard enough for the right information.

In this article, we shed a little light on some of the most common misconceptions about health. From old wives tales that have mutated into ill-informed Facebook posts, to the latest fitness fads, we’re debunking nine of the most pervasive myths of 2016

 

#1:MSG is Bad for You

MSG, or monosodium glutamate, has got a lot of bad press. It’s been accused of causing everything from headaches to brain damage, Alzheimer’s disease, Parkinson’s disease, cancer and more.

However, countless studieshave proven that MSG – which mostly consists of salt and glutamate (a common amino acid that occurs naturally in everything from tomatoes to human breast milk) – is harmless.

The problem isn’t with the MSG itself: it’s with the food that it is usually put in. Generally, the foods that need the umami “flavour enhancement” MSG offers are low quality, highly processed foods that are bad for you anyway.

And, while some people swear that they know the effects MSG has on their systems, scientists suggest that this might just be an allergic reaction to the chemical.

The verdict: MSG is fine.

 

#2: Diet Soft Drinks Cause Cancer

Chances are, you’ve read an email or social media post explaining why a governmental/multinational conspiracy has been covering up the fact that drinking diet soda causes MS, cancer, lupus and more.

However, comprehensive reviews of all of the studies on diet soft drink have proven over and over that the artificial sweetener used in most diet soft drinks – aspartame – is completely safe.

“The weight of existing evidence is that aspartame is safe at current levels of consumption as a non-nutritive sweetener,” one of the most recent of such reviews states.

Verdict: Many studies have shown that diet soft drinks don’t cause cancer. Articles that say otherwise are usually anecdotal, unverified, or misinformative.

 

#3: Drinking Fruit Juice is as Healthy as Eating Fruit

There are a number of reasons why you might think fruit juice is healthy. After all, it has fruit in it, and fruit is full of the vitamins, minerals, fibre and antioxidants our bodies love.

However, there are a few reasons why drinking fruit juice is just not comparable to eating whole fruits, and they’ve all got to do with sugar:

1. The sugar content of fruit juice (and fruit drink, which is often packaged identically to real juice) is often on par with or in excess of the amount of sugar in fizzy drinks like Coca Cola
2. Chewing through multiple pieces of fruit in quick succession would be quite difficult for most people. Drinking large amounts of sugar-laden juice, on the other hand, is quite easy. The liver is the only organ that can metabolise fructose (the main sugar found in fruit juice), and once the liver gets overloaded, it’ll turn that sugar into fat build-ups and may eventually start resisting insulin.
3. A lot of the fibre that should be in fruit juice is in the fruit’s pulp, which is not included in your average glass of juice. With fibre out of the equation, it’s harder to justify the sugar intake vs. nutritional value gained from drinking juice.

Verdict: Fruit juice is a treat, not a replacement for actual fruit or vegetables.

 

#4: It’s Possible to Contract Sexual Infections from a Toilet Seat

Good news! You cannot contract sexually transmitted diseases and infections from a toilet set.

Why? According to doctors, these bacteria and viruses aren’t able to survive out of the warm, moist environment that is the body for very long – and they definitely can’t live on the cold, hard surface of a toilet seat. Plus, the parts of your body that are susceptible to contracting these things aren’t actually in contact with the seat when you use the bathroom.

Verdict: Forget about contracting STDs and STIs from toilet seats. The real concern is getting sick from coming into contact with door handles, flush buttons and other surfaces that have been touched by people with unwashed hands.

 

#5: Sun Protection Makeup Can Replace Sunscreen

This is a tricky one. Theoretically, foundation or moisturiser with SPF qualities (preferably SPF 30) will protect your skin from the sun. However, in practice, most women don’t apply enough of it to be fully protected, nor do they reapply throughout the day.

Sunscreen takes two to three hours to lose its effectiveness, so unless you’re going to reapply your foundation at least twice a day, sun protecting make up just isn’t as good as sunscreen.

Verdict: Chances are, you’re not applying enough makeup frequently enough to get sufficient sun protection. When you consider that so many skin cancers are found above the neck, it makes sense to incorporate regular sunscreen into your skin care routine.

 

#6: Chewing Gum Stays in Your Gut for Years

Most of us were told as children that we’d better not swallow our gum because it will take seven years to digest and/or it will collect with the other gum you’ve swallowed and create a disgusting gum ball that will eventually clog your internal organs and kill you.

Fortunately, scientists agreethat these rumours are completely unfounded. Chewing gum doesn’t “stick” to your insides, and your body can usually pass foreign bodies out of the stomach with ease as long as they’re less than 2cm in diameter. So you can expect swallowed chewing gum to take just as long to get out of the digestive system as regular food.

However, “chronic” gum swallowing (several times a day over a long period of time) can cause constipation, and in very rare cases gum may collect and create blockages.

Verdict: Your body will pass gum just like it passes other indigestible foods (popcorn kernels for instance) – but becoming a compulsive swallower is still not recommended.

 

#7: You Can Burn Fat in Specific Areas if You Target Your Training

On the surface, it makes sense to think that focusing your exercise regime on certain areas of your body will help reduce the fat in those areas.

Sadly, according to exercise physiologist John Stevens (and the vast majority of fitness professionals), that’s not the way weight loss works. Spot training will strengthen the muscles underneath the fat you are trying to burn, but will not, in fact, eliminate that fat. This is because fat is burned evenly throughout the body, and it is cardiovascular exercise – not weights or crunches – that leads to fat loss.

And, before you rush to get liposuction, it’s also worth knowing that fat’s amazing redistribution powers aren’t limited to regular weight loss. Many people who have had localised fat loss surgery (read: liposuction) have been disappointed to see the fat in other parts of their body moved back to the area they got cosmetic surgery on, thus rebalancing the body’s fat distribution.

Verdict: Cardiovascular exercise is the only way to reduce body fat, and the body will remove fat evenly.

 

#8: Yoga Will Help You Lose Weight Quickly

Yoga has long been the wonder child of the fitness industry. Strengthening, toning, improving flexibility, reducing back pain and lessening symptoms of a host of diseases (depression, diabetes, arthritis)… is there anything yoga can’t do?

Yes. Yoga is not great at getting you slimmer – efficiently, anyway. Yoga is not an aerobic workout. It doesn’t burn very many calories. And, in terms of resistance training, it is less effective than a simple weight lifting routine.

Verdict: Yoga has many benefits, but if you’ve got a weight loss deadline to meet, supplement your yoga with cardio and/or weights.

 

#9: Toner Shoes Burn Extra Calories & Tone Your Legs

“Toning shoes” have been touted as a fast way to tone your legs, glutes, and burn those extra calories without really changing your daily routine at all. So, it should come as no surprise that they don’t actually work.

In fact, these shoes can cause foot, leg, and hip pain in wearers that stops them from walking as much as they usually do – having an overall negative impact on their fitness!

What is surprising is that these shoes are still for sale five years after they’ve been proven ineffective, and this is despite the fact there have been so many successful lawsuits against the manufacturers that there are even law firms dedicated solely to toning shoe injury claims.

Verdict: Don’t waste your money on expensive toner shoes. They can do more harm than good.

 

Are you in the market for a life insurance policy?

Looking for life insurance sure can seem daunting and we know how hard it can be to find the right policy for a good price, but getting covered and protecting your loved ones won’t be so tough if you’re well prepared.

By learning a little bit about what life insurance is all about and how it applies to your situation, you will be well equipped to compare all the options out there and find the policy that is right for you.

Compared to other insurance categories, life insurance is actually pretty straightforward. But premiums and conditions can vary, and these factors among many others have to be considered before purchasing a policy.

In this article, we will share with you the key factors you need to know when comparing life insurance so that you can find the most suitable policy for you.

Life Insurance Categories

 When comparing life insurance policies, you want to work out exactly what you want your life insurance to do for you, and the best place to start is by understanding the different life insurance categories available.

The two major categories are permanent life insurance and term life insurance. Permanent life insurance gives you cover for your entire life at a higher premium while term life insurance offers cover for a set period of time.

 

Level of Cover

 ‘Level of cover’ refers to the complete package of features, terms and inclusions found in an insurance policy. A number of factors come into play when choosing the best level of cover for you including your age, gender, health and lifestyle. For example, if you’re married with children and hold a mortgage, the level of cover you need is likely to be vastly different to a young, single person with zero debt.

So consider what you want to get out of your life insurance rather than choosing the first life insurance policy you find, because every policy is unique and is made to suit different people.

 

Cover Amount

 Another important step to take before comparing life insurance policies is to work out the amount of money that you would like paid to your beneficiaries. To work out this figure, consider if the payout will need to cover any of the following areas to help your loved ones after you have passed away:

• Expenses
• Debts
• Income replacement
• Future goals
• Medical costs
• Home modifications

 

Life Insurance Assessments

 Depending on your age and the level of cover you choose, insurance companies often require you to complete a number of medical examinations and assessments when applying for life insurance cover.

However, some people don’t want to go through invasive examinations to get cover, which is why non-invasive assessments are also available. Keep in mind that you will be paying higher premiums for this convenience. If you are healthy and willing to go through a longer assessment, it will be worthwhile for your hip pocket.

 

Pre-Existing Conditions

 If you have a pre-existing condition that could impact on your cover, it’s important to get advice first from an independent insurance advisor so they can point you in the right direction towards an insurer and policy that is most beneficial for you and your condition. Some insurers may look more favourably on your condition than others and some policies may be better equipped to cover you despite your condition.

 

Choosing an Insurer

 You need to trust that the insurer you choose will honour your claim if the need arises. Look at reviews and testimonials for the different insurers out there and use your own judgment when deciding if you can rely on this insurer come claim time.

Some factors that influence the quality of an insurer includes:

• Their level of customer service
• How long they have been in business for
• Who the parent company is
• What their claim processing history is like
• What is their reputation in the market
• Their credit score

 

Extra Features

 Riders are optional provisions that can be applied to your policy allowing additional money to be paid to your beneficiaries depending on specific circumstances. You can add or remove riders as you wish with most insurance providers to create a fully customised policy that suits your needs. A common way you can save money is to eliminate certain riders if you feel they are not needed.

Some of the riders you may find include:

• The accidental benefit rider where beneficiaries are paid if your death was due to an accident.
• The waiver of premium rider which will pay the policy premium if an accident resulted in your total and permanent disability.
• The children’s term life insurance rider which will pay your policy premium if a child that falls under your life insurance policy dies.
• The living benefits rider involves part of a death benefit being paid in advance if terminal illness is diagnosed.
• The payor rider where premiums are waived if you die before a dependent child reaches a certain age that is specified by you.

 

Discount Options

 If you are hoping to get a lower price for your policy, there are a number of ways you could get a discount. You could choose to pay your bill in full annually rather than monthly. Depending on the insurer you go with, you may also be able to save money by having the payment automatically withdrawn from your checking account.

Substantial discounts are also available from certain insurers for multi-policy and multi-life insurance policies. Multi-policy refers to buying more than one insurance policy at a time from one insurer. Multi-life insurance policies often involve more than one person (usually a couple) purchasing life insurance from the same insurer.

 

Flat Fee Policy

 Rather than choosing an insurance policy with a steep commission, making you pay more than you like for cover, you could consider purchasing a ‘no-load’ or ‘low-load’ policy which are less expensive options and are sold at a flat fee. Be aware however that these ‘no-load’ and ‘low-load’ policies offer minimal customer service and they should be thoroughly examined beforehand for financial stability.

 

Ways to Compare and Purchase Life Insurance

 Along with learning more about life insurance policies so you can compare them effectively, it is just as important to examine the different ways you can look into and purchase your policy. The most common ways people compare and purchase life insurance include:

 

Comparing Life Insurance with Cover Australia

 At Cover Australia, we want to make comparing life insurance as easy as possible by being up-front and honest about everything you need to know before choosing a policy.

Once you have taken all of these points into consideration, why not fill in an online quote form or give us a call and speak to one of our advisors. We are more than happy to help and point you in the right direction towards a policy that is the right fit for you.

It can be hard finding time in our busy lives to take care of ourselves. Between keeping up with work, friends, family and our usual day-to-day tasks, it’s easy to forget about booking in regular checkups with our GP.

While it may seem that all is well, you never know if there may be an underlying health condition you’re unaware of. So by making sure you have a routine checkup, any health issues can be picked up on and treated before they become a bigger, more serious problem.

Let’s face it: your health is something you should never put off. It really is worthwhile making that effort to ensure you have a clean bill of health.

 

How Often Should I Have a Checkup?

Your age and health status play a large part in how frequently you should have a health check. If you’re under 45 and in good health, you should have a routine checkup every 2 to 3 years, according to Australian Unity.

As you get older, you become more vulnerable to illness. It’s important to acitvely monitor your health as this occurs by booking in more regular checkups. If you’re over 45, you should have a checkup with your doctor every year.

If you have a medical condition that needs to be monitored, your doctor will advise if you’ll need checkups more regularly.

 

What to Expect from a Checkup Appointment

If you’ve never had a regular health check before, you may wonder how this type of appointment is any different to visiting a doctor when you’re feeling sick. The biggest difference between a checkup and seeing a doctor due to illness is the focus on overall health rather than diagnosing and treating a particular condition.

Because a checkup is very broad, a number of areas can be covered to ensure you’re on the right track with your overall health.

 

Other Regular Medical Tests

Along with regular health checks with your GP, you should also stay on top of other important screening tests for major life-threatening conditions. Depending on your age and sex, some of the medical tests you should take part in on a regular basis include:

 

Why Regular Health Checks are Important

So now that we know what a regular health check involves, you probably want to know why it’s so important. Even though you may not enjoy visiting the doctor, especially when you’re feeling well, it’s something that we all need to do.

According to the Centres for Disease Control and Prevention, it’s vital for everyone to have regular checkups no matter your age, lifestyle or health status. Here are a few reasons why you should keep up with regular doctor appointments:

 

Book a Health Check with Your Doctor

Being in good health is one of the most valuable gifts you could have, and the best way to maintain your perfect bill of health is to lock in a regular health check with your GP.

If there are any particular areas of concern that you would like your doctor to check or if there are any tests you would like to be performed, don’t hesitate to ask your doctor during your checkup. After all, you know your body better than anyone so if you’re experiencing any symptoms out of the ordinary, it’s worthwhile getting them checked for your peace of mind.

Even if you think you’re in good health, don’t put off a health check any longer and book in to see your doctor.

As an alternative to buying life insurance through a provider or adviser, many Australians choose instead to hold their insurance cover through their superannuation fund. While this is a viable option and can offer policyholders some great benefits, the majority of people simply accept this default cover without actually looking into whether it’s the right option for them.

In fact, according to CommInsure’s 2012 Life Insurance Survey, 65% of Australians settle for the default level of life insurance in their super funds – most likely because of its automatic inclusion.

It’s certainly an appealing option for a lot of people because of its low cost and little effort, but it’s also problematic because it’s leaving many people significantly underinsured – and they probably don’t even realise it.

Life insurance and super can work together to protect your livelihood and loved ones, but it requires a little more than just ticking a box on your super forms. Find out below how to make sure you’ll always be adequately covered, no matter what happens.

 

The Life Insurance/Super Relationship

In Australia, we’re lucky enough to have mandatory superannuation as part of our employment benefits, where 9.5% of your salary is invested into a super fund for you to access when you retire. This structure also allows super funds to arrange life insurance for their members, with the premiums paid for out of your super account balance.

Super funds – including self-managed super funds (SMSFs) – will generally offer three different types of insurance for members, which you can choose to increase, decrease or cancel depending on your individual circumstances:

• Life Insurance pays out a lump sum benefit to your nominated beneficiaries after you die.
• Income Protection Insurance provides a replacement income stream if you temporarily can’t work because of an illness or injury.
• Total and Permanent Disability (TPD) Insurance pays a lump sum benefit if you become seriously disabled and are unable to ever return to work.

Life insurance (and its associated income protection and TPD insurance) is a necessity for anyone who earns and relies on an income, and having this default level of cover within your super means that most people have at least some form of financial protection in place.

However, super funds generally only offer the minimum level of cover, so relying solely on your super for a complete protection plan usually won’t be enough. Yes, it’s probably cheaper and easier to just stick to what’s provided rather than taking out a stand-alone life insurance policy, but it comes with the risk that you may not be properly provided for when the time comes for you to claim.

If you currently have life insurance through your super fund, it’s vital that you find out all the details of the cover you have and work out whether it’s actually enough for what you need to secure you and your family’s future.

Check your product disclosure statement (PDS), contact your super fund, or talk to an insurance adviser for an assessment of the amount of cover you have vs. the amount of cover you really need.

 

Insuring Inside Your Super: Yes or No?

There’s no right or wrong answer. As with all life insurance options, choosing a super fund with built-in insurance has its pros and cons and needs to be considered in line with your budget, circumstances and future needs.

Pros

• It can be cheaper: Life insurance inside super is usually cheaper because super funds purchase policies in bulk, allowing them to pass their group discounts on to you.
• You won’t need to take a medical exam: Standard cover will often be automatically accepted without you having to fill in any complex forms or take a medical examination.
• Premiums are deducted from your super balance: You can choose to pay the premiums out of your super contributions rather than touch your take-home salary, so you won’t even notice paying it off.
• There are tax advantages: Paying for your insurance out of your super balance can be tax-effective as it either generates a direct tax deduction or, if you choose to salary sacrifice the cost of the premiums, is paid from pre-tax income.

Cons

• The cover is limited: The types of insurance and levels of cover available inside super is much more limited than stand-alone cover, and may not be sufficient for your needs. Life cover in super is often only for $100,000-$200,000 when realistically you may need something closer to $500,000 or $1,000,000 to adequately protect your family.
• Payout is slower: There can be delays in your benefit payouts because they go to the super fund first, which then distributes them to you or your beneficiaries, making it a more lengthy process.
• It reduces your super balance: On the flip side of paying the premiums out of your super balance rather than your take-home pay, you’ll end up with less money in your super fund for retirement.
• You may not be able to nominate your beneficiary: The Trustee of the super fund makes the final decision about the distribution of benefits, so unless you have the option of making a binding beneficiary nomination, there’s no guarantee that your life insurance payout will go to the people you want it to.
• Tax may be payable on some benefits: Beneficiaries who are not financially dependent on you will have to pay tax on the benefits they receive.

 

Tax Considerations

The way tax is applied to your insurance premiums and payable benefits is also different between insurance policies inside and outside your super fund. According to a Macquarie Life report on insuring through super, the tax treatment is as follows:

 

 

It’s important to carefully consider all the pros, cons and tax implications of life 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 and your family’s future.

 

The Bottom Line

Whether you choose to have life cover in your super fund or outside of it, what it comes down to is this: do you have enough?

Any life insurance is better than none, but it’s important to know exactly how much cover you have, what your insurance provider will or won’t pay, and any other special circumstances or conditions relating to claims.

According to the CommInsure Survey, 58% of people insured through super don’t actually know the details of their cover. So if you’re currently covered through your super fund, make sure you ask. And if it’s not enough, there’s nothing stopping you from increasing your cover or taking out a second stand-alone policy outside of the fund.

When it comes down to it, it’s about your financial security and peace of mind. And that’s always worth double checking. 

With so many expenses to worry about in our day-to-day lives, the cost of death is usually the last thing on our minds. But it’s still a very important topic we all need to consider.

Death in Australia can be expensive and the cost your loved ones are likely to pay will vary greatly depending on a number of factors including how they died, how old they are and the financial situation they were in before passing away.

In this article, we’ll discover how much it costs to die in Australia and consider these costs compared to the price paid for life insurance policies.

 

The Process Following a Death

 Before we get into costs, it is important to know exactly what needs to occur after someone dies in Australia. The Australian Government’s Human Resources Department website details the process involved after someone has passed away.

After a cause of death certificate is obtained from a doctor, the deceased is then taken into care by the funeral company. Insurance policies, funeral plans, and wills then need to be considered, and Centrelink must also be informed when someone has died.

This is just the tip of the iceberg however. We recommend downloading a ‘who to notify checklist’ from the Human Resources Department website, so you know everything required.

 

The Cost of Dying in Australia

When a person dies, the resulting costs can vary significantly from person to person. The 2014 Grattan Institute study into death in Australia provides insightful information about the face of death in our country.

Australia has an ageing population. As baby boomers grow older, the number of Australians that die each year will double in the next 25 years.

Here are some more statistics to keep in mind:

• Half of Australians die in hospital
• One-third of Australians die in residential care
• 14% of Australians die at home

Despite these figures, 70% of Australians would prefer to die at home.

The cost of death varies considerably depending on how and where someone dies. The average cost of a person aged 50 and over being admitted to hospital and then dying in hospital in Australia is about $19,000, while deaths in residential care equate to half of this cost on average.

In total, $2.4 billion is spent on dying people in acute inpatient care each year, and care for people aged over 65 during their last years of life take up 5% of the total health budget.

 

Cost of a Working Age Parent Dying

One in five families in Australia are impacted by the death of a parent due to illness or a serious accident, according to the Lifewise/Natsem Underinsurance Report.

The impact of a parent’s death is more serious when the parent is of working age and the family is dependent on their income. The death of working aged parents in Australia is more common than you may think, with 18 Australian families losing a working age parent every day. When a working age parent dies, these families instantly lose half or more of their income.

Unfortunately, this report also shows that 95% of families are underinsured. As a result, the Federal Government is expected to pay $1.3 billion over the next 10 years due to underinsurance. That means it costs Australian taxpayers $131 million annually to provide for underinsured families after the death of a parent.

 

Daily Living Expenses

One of the first things that will likely suffer for your family if you were to die will be daily living expenses. According to most recent census data from the ABS, on average Australians are spending most of their budget on:

• Housing
• Transport
• Recreation
• Household furnishing

And this is just the start of all the living expenses to stay on top of – especially when you have a family to take care of as well.

Next Step Australia statistics show that education costs for school-aged children can range between $200 to $20,000 per year depending if the children attend a state school or private school.

Groceries will cost a family of 4 $220 on average, electricity bills cost $50 to $110 per month, and a telephone/broadband bill costs Australians between $90 and $140 per month depending on the package purchased.

These are all essential living expenses that need to be maintained, so it is important to consider how these areas of life would be affected if you died and your family had to cover these costs without you.

 

Outstanding Debt

One of the biggest dilemmas loved ones are likely to face after your death is covering any outstanding debts you may have after you pass away. To get a clear idea of much debt there is in our country, visit the Australian Debt Clock.

As of May 2016, the total private debt in Australia stands at $2.5 trillion. Digital Finance Statistics has also shown that average household debt had reached record heights at $245,000. With over 150,000 Australians dying in 2014, according to ABS statistics, and the majority of these people likely holding some form of debt, that’s a lot of outstanding money to be paid when these people pass away.

It is important to note that personal debts held by the deceased are only to be paid by another person if the debt of the particular asset is owned by someone else, if the debt is in joint names with another person or a third party has guaranteed the debt.

 

Mortgage Repayments

Australian household debt has tripled in the last 25 years, according to ABC. As of 2015, household debt averages 18 months of annual income. When a property owner dies, that mortgage will still need to be paid.

If the deceased person has a joint home loan, it is a heavy burden for the other person to take on those mortgage repayments solely, especially after losing the second source of income. According to Finder.com.au, if there is no co-borrower on the home loan, the mortgage payment must be made by the beneficiary.

 

Funeral Costs

One of the most immediate expenses you are likely to pay after death is funeral costs. ASIC’s Money Smart has looked into how much funerals cost in Australia, and it has been revealed that funerals cost between $4000 and $15,000. A number of costs are included in this price including the coffin, transport, funeral director fees and the death certificate, just to name a few.

It’s easy to prepare for funeral costs by taking out funeral insurance. At Cover Australia, all life insurance products we have available come with a funeral benefit included. Sufficient term life insurance can also cover these funeral expenses. Visit our Other Types of Life Insurance page to find out more.

 

Will Life Insurance Cover these Costs?

Life insurance providers have a thorough understanding of the costs a family is likely to incur when a person dies, and life insurance policies are made specifically to cover the most essential expenses when your family needs it most. Most life insurance policies will provide enough payment to cover costs including outstanding debts, mortgage repayments, daily living expenses and funeral costs.

When a policyholder dies, the life insurance will pay out a lump sum to the beneficiary. As long as the life insurance policy taken out is sufficient, the money should be enough to pay off the house and replace the income so that various household costs can be covered.

Life insurance will cover Australians who have died from a serious accident or medical condition. Please keep in mind however, a number of exclusions are present in typical life insurance policies and these can include:

• High-risk occupations
• Hazardous hobbies and pastimes
• Suicide
• Pre-existing medical conditions
• Failure to disclose information
• Death attributed to war or insurrection

There’s a range of life insurance policy types available, and each policy has its own process to cover costs associated with death. If you’d like to learn more about the different life insurance options available, contact us at Cover Australia for expert advice on how to cover costs associated with death.

Have you confidently submitted all of your life insurance paperwork after going through the hassle of blood tests, medical exams and questionnaires, only to be hit with an application denial?

Insurance companies deny applications for many reasons, from pre-existing health concerns through to having a dangerous occupation or a hazardous recreational lifestyle.

However, many people who have their life insurance application rejected are left wondering where they went wrong.

If you’re unsure why you haven’t got the nod of approval, scroll through our list of the 14 most common reasons why insurers deny life insurance applications.

 

Health Reasons

#1: High Cholesterol, Lipids & Triglycerides

Heart disease kills one Australian every 27 minutes, and one in six Australians will have a stroke in their lifetime, so it should come as no surprise that the high cholesterol levels which can cause these conditions are a red flag for insurers.

If you’re one of the 5.6 million Australians that have unhealthy levels of cholesterol (whether that be unusually high levels of “bad” cholesterol (LDL), low levels of “good” cholesterol (HDL) or both), it will be worth your while to get your levels under control before you apply for life insurance.

 

#2: High Blood Glucose

If your blood sugar levels are off the chart, don’t be surprised if your life insurance application is rejected. Elevated blood glucose levels are a precursor to type 2 diabetes – a condition that has been described as a “silent pandemic” because it currently affects 1 million Australians.

 

#3: Hepatitis

If you didn’t know that you’re positive for hepatitis B or C until you had already submitted your life insurance exam, your application will almost certainly be rejected.

This is one of those areas where you’re better off being honest from the start of your application, because if you declare that you have Hepatitis and are either getting treatment, or have been successfully treated in the past, you may still be eligible to get insured.

 

#4: Positive Alcohol Marker

One of the things insurance companies look for in your blood test is the presence of “carbohydrate deficient transferrin” or CDT. CDT in your blood indicates that you’re a heavy drinker. You won’t get a positive alcohol marker from drinking casually, or even if you have a few drinks on the day of your exam. It will only show up when your liver is stressed from consistently having to process alcohol.

Because excessive alcohol consumption raises both the chance that you’ll engage in life-threatening activities and damages your body when you consume it, getting a positive alcohol marker will result in automatic denial.

If you’re rejected because of a positive alcohol marker, it’s a good idea to stop drinking and find a way to substantiate your sobriety before you apply for life insurance again.

 

#5: Signs of Elevated Liver Function

Elevated liver function is an easy way to get your application rejected because, similar to the presence of CDT in your blood, it indicates that you are consuming excessive amounts of toxins that your liver cannot handle.

When it comes to your liver, life insurance companies will always assume the worst case scenario: a long term, life threatening condition.

Fortunately, this type of serious condition isn’t always the case and elevated liver function can often be reversed.

It is worthwhile getting your liver function tested before conducting your life insurance exam so that you have a chance to improve your results, and get follow-up medical attention if you do in fact have a serious problem.

 

#6: Positive Drug Test

If your test results come back positive for drug use, your insurer will definitely knock back your life insurance application. As with alcohol abuse, drug consumption not only affects your physical health but indicates that you’re more likely to get into life-threatening situations while under the influence. It is advisable to establish a period of verifiable sobriety before you attempt to obtain a life insurance policy.

 

#7: Blood or Protein in Urine Samples

The presence of blood or protein in your urine could mean you are experiencing a serious kidney condition, or it could just be a by-product of an extremely physically active lifestyle.

This is another one of those symptoms you want to identify, find the cause of, and treat before you submit your application.

 

#8: Being Overweight or Obese

Insurance companies don’t just evaluate your application based on the number of kilograms you weigh. Rather, they use a combination of your height to weight ratio and whether you have any other health risks to assess your eligibility.

Just being overweight usually doesn’t mean you’ll be automatically declined, but it often means you’ll have to pay higher premiums.

 

#9: History of Cancer

Despite the huge cancer treatment advances that have been made, having previously had cancer may make it hard for you to get life insurance. If you’ve had cancer in the past, your risk profile will largely be determined by the type of cancer you had, what stage it progressed to and how long it has been in remission.

 

#10: IDS or HIV

These days, many people who have AIDS or are HIV positive not only survive, but live normal lives. However, many companies in the insurance industry still see AIDS and HIV as major risks to your life expectancy.

If you are positive, it’s worthwhile shopping around for a company that has an accommodating policy before you apply.

 

#11: Mental Illness

Suffering from a mental illness such as depression can affect your ability to get insured. Even if your condition is completely under control and you’re receiving medical treatment or counselling, an insurer that can provide reasonable and relevant information including data to support their decision can deem you too great a risk.

 

Non-Medical Reasons

 

#12: Poor Driving History

Car crashes are a leading cause of death for otherwise healthy people. So, if your driving record shows that you have been in multiple accidents, been caught drunk or drug driving, or have had your licence suspended or revoked for other reasons, this can affect your ability to get life insurance. This is especially true for applicants in a higher risk category such as youth or elderly people.

 

#13: Hazardous Occupation

If your job or working environment is significantly more dangerous than the average occupation, you may find insurance companies very reluctant to give you protection.

 Australian life insurers have released a list of the 10 most dangerous (and therefore uninsurable) jobs:

• Commercial fishers: You might think that mining is the most dangerous industry, but adding water to the mix makes fishery 17x more dangerous than its land counterpart.

• Truckers: You’re 10x more likely to die while at work if you are a trucker than if you’re in a regular occupation.

• Farmers: There’s one main reason that farmers find it hard to get life insurance: tractors. Overturned tractors are a leading cause of death for farmers, with machinery accidents not far behind.

• Miners: Workplace hazards such as toxic gases and explosions kill 50-60 Australian miners every year.

• Construction workers: With similar rates of workplace fatalities as mining, construction is considered a high-risk profession.

• Tree loppers: Working with chainsaws, at great heights, and around power lines makes it hard for tree loppers to get insured.

• Defence force: Whether you’re in the army, airforce, navy or police service, you’re routinely subjected to a wide range of risks including disease, assault and injury.

• Firefighters: Both the exposure to fires and accidents, and the stress that this occupation places the human mind and body under make it a profession that’s less than ideal in insurer’s eyes.

• Pilots: The chances of mechanical failure, bad weather, and other hazards aren’t enough to stop most of us flying, but they are enough to make insurers think twice.

• Garbage collectors: The combination of working on the road and being exposed to bacteria, toxins and chemicals on a daily basis makes this a job insurers would prefer not to deal with.

 

#14: Dangerous Extra-Curricular Activities

You may have noticed that your application involved more than a few questions about what exactly you get up to in your spare time. For some applicants, it’s not their health or work that prevents them from getting life insurance; it’s their penchant for a hazardous lifestyle!

What exactly is a hazardous lifestyle? Participating in activities like skydiving, base jumping, scuba diving, flying planes or other extreme sports in your spare time could deem you a life insurance untouchable.

 

What to do if You’re Denied

If you’ve been denied, don’t fret! There is a range of ways you can still get life insurance. A few basic tips for getting the tick of approval include:

Research Other Companies

Every insurer uses a different set of guidelines to determine who is a suitable candidate for life insurance. What might be a deal breaker for once company may be perfectly acceptable to another. Take the time to research which companies will be more lenient in the areas you fall short before you apply.

 

Ask Why You’ve Been Denied

It’s your right to know why you weren’t given life insurance. By finding out why you have been denied and fixing that problem, you’ll give yourself a much better shot at approval the second time around.

 

Double Check Your Medicals

If you’ve had some surprising medical results returned to you, it is worthwhile getting your own medical practitioner to verify these findings. Mistakes are made, and if you can prove that your initial assessment was not correct, you may still be able to get the policy you wanted.

The bottom line: If you’ve had your life insurance application knocked back, it is either because you’ve got a pre-existing medical condition that you’re better off knowing about anyway, or you’re displaying some work or lifestyle risk factors. There are always steps you can take to make yourself insurable, you just might not be able to get the cheapest cover on the market.

Everybody knows the main reason you purchase life insurance is to provide a lump sum of money to maintain your family’s wellbeing when you die.

Many people don’t realise, however, the true extent of the good this payment can do, and the multitude of problems it can solve – both before and after you pass away.

Below are the top four ways that purchasing a life insurance policy can actually make you a better person.

 

#1: You Can Give It to Charity

Have you been racking your brain trying to find a way you can make a real impact for the causes you love and support?

Nominating a charity to receive part of or your whole life insurance policy when you die is one long lasting way to give that many people don’t often consider.

There are two ways to give your life insurance policy to charity.

The first is simply listing the charity you want to support as your beneficiary. If you have a policy that allows for a negotiable beneficiary, listing a charity as your beneficiary means you don’t give up potentially accessing the value of your policy when you’re still alive, should you need it.

Alternatively, the second way to donate your life insurance policy to a good cause is by transferring the ownership of your policy to a charity. While this means the charity has control when they cash out the value of the policy, it also means that your payments may be tax deductable. This can be a very advantageous way to dispose of a policy that, because your circumstances have changed, you no longer require but do not want to just cash out.

Either way you swing it, there is only one downside to donating your life insurance to charity: You won’t get the satisfaction of having your contribution recognised while you are living.

But, you will still leave a lasting legacy that you may not otherwise have been able to achieve.

 

#2: Life Insurance Helps You Protect Your Family

Life insurance is for the living. The life insurance policy you leave behind actually has nothing to do with you – it’s designed to help those you love. Just a few of the ways life insurance will help the finances of your beneficiaries after you pass away include:

• Providing the funds to cover funeral expenses
• Paying for any unsettled medical bills you might have if you die as a result of illness or an accident
• Paying for potential estate taxes incurred upon death, so that precious family assets do not have to be sold
• Taking care of outstanding debts including the mortgage on your family home
• Funding your children’s education
• Allowing your family to continue in their routine without the financial hardship of living without your income

In Australia, the time it takes to pay out the lump sum of a life insurance policy is usually 7 to 14 days. With life insurance, your beneficiaries usually won’t even feel the pinch of missing the next pay check after you pass away.

 

#3: It Keeps Families Unified After Death

So many beneficiaries are contesting wills around the world that a whole industry of “deceased estate litigation” has emerged.

If you want to make dispersing your assets when you pass away as pain-free and fair as possible, a strategically valued life insurance policy is a must-have.

How can a life insurance policy help you distribute your wealth fairly?

Consider this example: There are two people that you want to receive equal portions of your net worth, but you do not want your property to be sold. By nominating one person in your will to receive your property, and the other to be the sole beneficiary of a life insurance policy that is of equal value to the property, you can make sure both parties get an equitable share.

By making these preparations before you pass away, you’ll ensure that a time of grieving doesn’t come with extra suffering and conflict.

 

#4: Life Insurance is a Sign of Financial Maturity & Security

Depending on the type of policy you purchase, once your life insurance has accumulated you may be able to either borrow against the value of your policy or withdraw your funds. 

Terminating your policy while you’re still alive will mean you are given the money that’s been invested on your behalf (after termination charges are deducted). You can use this money to:

• Invest in a new business venture
• Pay debts and avoid acquiring a bad credit rating
• Fund your retirement
• Support your family through an emergency

Purchasing life insurance is a sensible backup plan for unforeseen circumstances. Having the right policy can help you avoid borrowing money from friends and family, signing up to high-interest loans you may not be able to pay in the future, or in the worst case scenario, facing business closures or bankruptcy problems.