Why we insure Insurance is a very important part of any comprehensive financial plan, giving you financial protection against a range of risks like loss of property, loss of your ability to generate income and medical expenses. There are four main types of insurance – general insurance, private health insurance, personal insurance and business insurance. Each of these types of insurance are discussed below.

Regular review

There are many changes in personal circumstances that can affect the kind of insurance you should have and the level of insurance that is appropriate for you. As a result, it makes sense to review your insurance coverage regularly. When better than at your annual review with your financial Adviser? Of course, some changes require immediate attention, including when:  You change your marital status.  You have children.  You increase or reduce your debt significantly.  You change your residence.  You upgrade your motor vehicle.  Your salary increases or decreases.  You start your own business.  You retire.

Personal insurance

There are four main types of personal insurance, to protect you in various circumstances:  Term Life;  Total and permanent disability;  Trauma (also called Critical Illness or Living Insurance); and  Income protection (also Salary Continuance Insurance).

Term Life (or Death)

Term life insurance pays a lump sum benefit if the life insured dies during the term of the insurance. Purpose  To enable the beneficiary – such as a spouse or child – to repay debts (e.g. mortgages, credit cards, margin loans, personal loans).  To cover capital gains tax liabilities that may arise from the settling of your estate  To provide for your dependants after the loss of their income provider.  To secure a business interest.

Available through super?

Term Life insurance can be included in most superannuation funds. The Trustee of the fund will own the policy on your behalf and pay the premiums using part of your balance or you can fund the premiums via super contributions. The benefit will generally be paid in accordance with your death benefit nomination. Tax treatment Stand-alone policies – Premiums are generally not tax deductible, and the proceeds are generally paid to the beneficiary tax free. This depends on the circumstances under which the policy is held. Term life through super – Premiums may be tax deductible to the super fund. The way in which the proceeds are taxed will depend on the beneficiary who receives the death benefit. You should discuss this with your tax adviser for more information.

Total and Permanent Disability Insurance (TPD)

TPD cover provides a pre-agreed amount of money, payable as a lump sum, if you suffer an illness or injury that makes you totally and permanently unable to work. You can take out TPD cover either separately or as part of a Term Life insurance policy. Purpose  Cover your mortgage or other debts.  Protect your business against loss of sales and profits.  Maintain business lines of credit  Provide an income stream to live on  Provide money for home modifications required due to an accident or illness.

Available through super?

Total and permanent disability insurance can be included in most superannuation funds. The Trustee of the fund will own the policy on your behalf and pay the premiums using part of your balance or you can fund the premiums via super contributions. While you can include TPD insurance in Super, you need to be aware that the proceeds can only be accessed if the trustee is satisfied that you have met a condition of release. Tax treatment Stand-alone policies – Premiums are generally not tax deductible and proceeds paid to you or your spouse are generally not subject to tax. Otherwise the tax treatment depends on the circumstances under which the policy was taken out and on who receives the proceeds. TPD through super – Premiums can be tax deductible to the super fund depending on the terms and conditions of the policy. If certain conditions are met, the payment of the proceeds to the member may have a portion that qualifies as a disability payment and will be received tax free. If you become unable to work because of sickness or injury, this type of insurance will typically pay you up to 75% of your earnings for a certain period, until you are able to return to work. Purpose Most people who work depend on their income to provide for themselves and their family. This makes the ability to earn income your most valuable asset. If, like most of us, you work for a living, then this type of insurance is extremely important.

Available through super?

Income protection insurance can be included in most superannuation funds. The Trustee of the fund will own the policy on your behalf and pay the premiums using part of your balance. While you can include Income Protection insurance in super, you need to be aware that the proceeds can only be accessed if the Trustee is satisfied that you are temporarily or permanently disabled. Tax treatment Premiums for this type of policy are generally tax deductible and any proceeds that you receive from this policy are considered assessable income for income tax purposes.

Trauma (also known as Critical Illness or Living Insurance)

This type of insurance pays you a lump sum if you suffer one of the major health traumas specified in the insurance policy. Specified traumas typically include certain cancers, heart disorders, nervous system disorders, various accident conditions, specific body organ disorders and loss of speech. Detailed definitions are contained in the product disclosure statement for the relevant insurance policy. Purpose What if you suffer a serious illness or injury, but are not totally and permanently disabled? Your TPD cover does not apply and even if you have income protection cover to pay your general living expenses, it may not be enough to cover all the additional expenses associated with a serious illness or injury – e.g. medical bills. This is why Trauma Insurance is so important. The benefits of trauma insurance include:  Pay for specialist medical attention.  Cover the cost of modifications to the home.  Avoid financial stress in recuperation.

Available through super?

Critical illness cover is generally not purchased through superannuation as in most circumstances you would not meet a condition of release. Tax treatment Premiums are generally not tax deductible and the proceeds are generally paid tax-free if paid to yourself or your spouse. The tax treatment may be different where the trauma insurance is part of key person insurance policy (described in the next section of this brochure).

This information is of a general nature only and has been provided without taking account of your objectives, financial situation or needs. Because of this, you should consider whether the information is appropriate in light of your particular objectives, financial situation and needs.