AFSG News

Have you considered.....

Income protection insurance

Most people consider their car and house when they insure… but what if you can’t work for health reasons or an accident and have no income?

Without income there is no outcome. If you were self-employed this state of affairs would be a major concern.

Income Protection protects against the loss of one of your most valuable assets - your ability to earn money. If you become disabled due to illness or injury, Income Protection provides you with a monthly income. It provides you with the financial security you need to concentrate on recovering without having to worry about your bills.

If something happened to you and you were unable to work, would you have enough money set aside to cover your day-to-day bills and look after your family? It is estimated that one in three Australians will be unable to work due to illness or injury for a three-month period, or longer, during their working life.

Confronted with this situation, many Australian families experience significant financial difficulty, sometimes with no income for more than three months. Most policies allow you to receive a monthly payment of up to 75% of your pre-injury or illness income.

The Business Expenses benefit is specifically designed for self-employed individuals (employed full-time) who need to ensure that the fixed expenses of their business or practice will still be paid even if they cannot work due to Injury or Sickness. The benefit covers business expenses less any amounts reimbursed from elsewhere.

Making the most of your income protection

An AFSG recommended insurer provides you with the following benefits:

Carer's Allowance

The Carer’s Allowance benefit will provide a benefit of 25% of their Income Protection benefit up to $2,000 per month, where the life insured under the Income Protection or Accident Only Income Protection benefits is required to give up work to care for an ill child.

Retirement Optimiser

Retirement Optimiser provides a benefit of 5% of the life insured’s Pre-disablement Income as superannuation contributions, paid to the policy owner’s nominated superannuation account.

Complimentary Interim Accidental Death and Income Protection Cover

While your application is being assessed, we will provide Complimentary Interim Accidental Death and Income Protection Cover.

Benefit Indexation

The Sum Insured on your policy will automatically increase each year by the Consumer Price Index (CPI) or 5%, whichever is higher.

Agreed Value

Your monthly benefit is agreed with you at the time of application and is based on your income at that time; OR

Indemnity Value

Your monthly benefit is calculated at the time of your claim and is based on your income at that time.

HIV / AIDS Cover

You are covered if you become disabled directly or indirectly due to HIV or AIDS (except for Accident only cover).

Waiver of Premium

If you become totally disabled, you won’t have to pay premiums from the end of the Waiting Period, until the end of the Benefit Period, or until the total disablement ceases.

Rehabilitation Expenses

If you have attended a rehabilitation program to get you back to work, we’ll pay the costs up to a maximum of 12 x your monthly benefit.

Recurrent Disablement

If you have returned to work on a full-time basis following payment of a disablement benefit and the same or related disablement recurs within 12 months, we will waive the waiting period.We will treat the claim as a continuation of your most recent claim. We will continue to pay your claim up to the end of your benefit period.

Severity benefit

This pays an additional 1/3 of your monthly benefit if you are on claim for over 6 consecutive months and then become totally disabled to the extent that you are unable to perform at least 2 of the Activities of Daily Living, up to a maximum of $30,000.

Death Benefit

In the event of your death, your nominated beneficiary will receive 6 x your monthly benefit, up to maximum of $60,000.

Worldwide Protection

If you travel overseas, full cover is provided 24 hours a day, 7 days a week, anywhere in the world.

Needlestick Injury Benefit - For Occupation Category AA only.

If you receive a needlestick injury or a splash injury while performing the duties of your normal occupation and become infected with HIV, Hepatitis B or Hepatitis C and experience a reduction in your earnings as a result. (Not applicable for the Accident Only cover).

In order to ensure you end up with the right level and type of cover, speak to an AFSG adviser about your insurance needs. He or she will be able to offer expert advice to help you find the right cover for your individual situation.

Insurance through superannuation

Many super funds arrange life and disability cover for their members. Insurance is arranged by the super fund trustee, acting on behalf of the members of the fund. Having insurance for accidents and illness can provide a sense of security for you and your family.

Super funds typically have three types of insurance for members:

• Death cover (also known as life insurance) - Your beneficiaries receive a benefit if you die
• Total and permanent disability (TPD) cover - You receive a benefit if you become seriously disabled and are unlikely to ever work again
• Income protection (IP) cover - You receive an income stream for a specified period if you can't work due to temporary disability or illness

Like other insurance policies, you will pay insurance premiums. These are deducted from your super account balance. Many super funds have a default level of cover that provides a small amount of insurance. However, you can choose to increase or decrease your level of cover to meet your needs.

Why Insure Through Superannuation

There are benefits in getting life insurance through super:

• It's often cheaper because super funds purchase insurance policies in bulk
• There may be a tax advantage because the premiums are paid from your super account, not your after-tax income
• You can get the cover you need for you and your family, even if money is tight
• It's easy to manage because premiums are automatically deducted
• Some funds automatically accept you for cover without requiring a health check

However, you also need to be aware that:

• The types of insurance available are limited
• The level of cover may be limited
• If you move to a different super fund or your employer's super contributions stop, your cover may end without notice
• If you have more than one super fund you may be paying for insurance in each fund, which may be an unnecessary cost
• Tax may be payable on some benefits
• There can be delays in the payment of life insurance benefits as these go to the fund first, who then distribute them to you or your beneficiaries
• If you do not make a binding beneficiary nomination, or your fund does not offer binding nominations, the super trustee will decide who gets your benefits when you die. Usually benefits are paid to dependents, after taking your wishes into consideration
• If your super recipient is not a dependant consider getting financial advice as there may be tax implications

Speak to an AFSG Financial Adviser about establishing insurance through your superannuation today.

Structured investments allow investors to gain enhanced exposure to a range of domestic and international growth opportunities. But instead of using your money to invest, you use someone else’s – the Banks. In exchange for using their money, you are charged an interest only rate from 7-14% per annum in advance (depending on the financial institution and product).

There are several benefits in taking this approach:

Any interest you pay on the investment loan is 100% tax deductible.

This offsets any capital gains made at the end of the term (ranging from 3.5 - 5.5 years).

Your investment loan is 100% capital protected.

For example, if you decided to borrow $25,000 to invest in the market, and the value of your investment dropped to $15,000, you are not required to top-up or pay back the $10,000 capital loss. You can simply walk away, sign over the shares and owe the Bank nothing. The same principle applies if you decide to realise any gains in the investment value before the end of the term.

- Worst case scenario is that you’ve lost the amount of interest paid on the loan to-date.

- You can exercise the ‘walk-away’ feature at any time during the investment.

Gains are amplified through leveraging (as are the losses, however the difference here is that you are protected against any loss).

Features on these types of investments vary dependant upon the product issuer as do interest rates. However, they provide an alternative to gaining exposure to the market without having to spend, or risk, a substantial lump sum of your own funds, with the added benefit of being tax deductible. Although, as with every investment, it involves risk, so ensure you get financial advice to determine whether this is the best approach for your circumstances.

SPECIAL OFFER – LIMITED TIME

Until November 22, 2013, we can help you secure a limited time only interest rate with a guaranteed 4% dividend return per annum on structured investments (subject to approval). Contact an Australian Finance and Securities Group (AFSG) financial adviser for more information today.

Buying your first investment property

Buying an investment property is one of the biggest decisions that you could ever make. Short of deciding to become a parent, it has long term ramifications that far outreach the simple act of signing a contract. Often, it can be a harder decision than buying your own home because you only get financial benefit from it compared to your own home which is both financial, physical and something you may have emotional attachments to.

Before spending thousands on an investment property, here are a few tips worth considering:

1. Don’t automatically buy near your own neighbourhood. If where you live is going to give you the best rent/growth, fulfils your need from a tax perspective and is essentially an ideal investment area, you’re lucky. You’ll find, on average, there are better investments away from where you live.
2. Do your cash flows again, and again, and again. Capital growth will generally come over time, however going broke because you didn’t do your budgeting or cash flow figures will negate the long term opportunity because you’ll have to sell before you get a profit.
3. Take time and get advice, but be careful where the advice comes from. Be aware of how the real estate law works – if you’re talking to a real estate agent they are acting for the vendor – not you.
4. Have finance approved before you buy and if buying off the plan, be sure about the risks that you’re taking by not being able to get finance until prior to completion.
5. Do your taxes, and don’t forget to claim all the deductions you’re entitled to.

Source: Financial Spectrum as licensee of Australian Finance and Securities Group (AFSG).