Life and Total & Permanent Disability (TPD) Insurance
If you have a spouse, children or others who are financially
dependent upon you, or you run the household, who will pay the bills or
help look after the children if you're no longer around?
Life Insurance can help by paying a cash lump sum if you die. The
lump sum is generally not taxable* and is payable to your estate or,
alternatively, to the beneficiaries you list in your policy, and can be
used for any purpose.
Term Life Insurance – Definition
Term life insurance pays a lump sum benefit on the death of the life
insured, during the term of the insurance. It is probably the most
economical form of protection for your family in the event of your
death.
Purpose of Life Insurance
Provides the ability to repay debts
- To cover capital gains tax liabilities
- To cover dependants from the loss of the major income provider
- To secure a business
Tax treatment
Premiums are generally not tax deductible unless linked in a
Superannuation Fund. Linked in Super Premium may be tax deductible if
the person is eligible for a tax deduction for their superannuation
contributions.
Target market
- The main provider of the family’s income
- Families with dependants
- Key people within a business
How much cover should you have?
The calculation of sum insured is an individual issue and varies
accordingly. It will depend on the stage you are at in life. Whether you
are single or married, whether you have debt and how much, whether you
have a spouse and children who need financial provision made for them,
whether you have a disabled child or other beneficiary who may need
special needs and particular sums of money ongoing, etc.
The more financial obligations, the more children you have, the more
assets requiring protection, previous marriage obligations, bank
guarantees, mortgages, growing children’s needs such as university
education, sporting costs, new vehicle costs, reasonable lifestyle costs
... the more life insurance that is needed.
* Tax may be payable on certain life insurance benefits, for example,
where the life insurance was taken out for business purposes or certain
payments from superannuation funds. You should discuss your specific
taxation circumstances with your accountant or taxation adviser.
Total and Permanent Disablement (TPD)
Unfortunately, accidents do happen. And while you may survive, what
if you can never work again?
If an accident or illness leaves you unable to earn an income in the
future, TPD Insurance will pay you a lump sum to help relieve the
financial pressure. It can also be useful for people who are not in the
workforce and are unable to take out Income Protection Insurance.
Definition
Total and Permanent Disablement is normally an optional extra cover
on a life policy. It aims to provide a lump sum of money should a person
suffer an illness or injury which totally and permanently incapacitates
them from working.
Own Occupation
Payable by reason of accident or injury as to render you likely never
again to be engaged in your own occupation. (Definition may vary from
company to company. Please refer to their Product Disclosure Statement).
Any Occupation
Payable by reason of accident or injury as to render you likely never
again to be engaged in any gainful business, profession or occupation
for which you are reasonably suited by your education, training or
experience. (Definition may vary from company to company. Please refer
to their Product Disclosure Statement).
Purpose
The function of Total and Permanent Disablement is to:
- Cover the mortgage or pay other debts
- Protect business against loss of sales and profits
- Maintain business lines of credit
- To provide an income stream
- To provide money for home modification
Taxation
Premiums are generally not tax deductible unless they are held within
a Superannuation Fund or have been taken out as key person (revenue)
insurance.
Benefits
If a TPD benefit is paid from a non-superannuation policy the
proceeds are generally tax free unless the policy was taken out for key
person purposes. If the benefit is paid from a superannuation fund then
it will be classed as an ETP with a portion of the benefit being classed
as a post-June 1994 invalidity component.
Target Market
- Younger people who would wish to maintain their independence
- Those with no income protection insurance
- Those with dependants
- Business partners
- Businesses with key employees
How much cover should you have?
You should consider mortgage or rent, other loans and debts, credit
cards, school fees and expenses, living expenses such as food, clothing
and bills. You should also allow for medical expenses or any home
modifications.
If an accident or illness leaves you unable to earn an income in the
future, TPD Insurance will pay you a lump sum to help relieve the
financial pressure. It can also be useful for people who are not in the
workforce and are unable to take out Income Protection Insurance.
How to apply
To apply for Term Life Insurance, contact Austbrokers Countrywide for
an application form.
Complete the Sum Insured
Checklist.
Transfer your existing policy to Austbrokers Countrywide
If you are not getting the type of service you expect maybe you
should consider a change and utilise the services of our experienced and
professional advisory team.
By transferring your existing policies under our management you are
entitled to the following services.
- Initial Full Insurance Review
- Annual Individual Insurance Comparison Report
- Advisory Hotline for all Personal Insurance enquiries
- Claims Assistance
- Insurance Advice for Family & Friends
Remember this is a free service if you transfer your policy to us.
Simply call Austbrokers Countrywide on 1800 245 123 or email us at
riskmanagement@abcountrywide.com.au
Page updated: 13/10/08 |
