Insurance from MLC. Smart Strategies. To make your insurance more affordable

Transcription

1 Insurance from MLC Smart Strategies To make your insurance more affordable

2 Making insurance more affordable A successful outcome relies on the right strategy and how you approach this end of financial year should be no different. This brochure outlines 3 Smart Strategies for insurance, specifically designed to help you capitalise on your financial position for this end of financial year. To find out how you can benefit from some of these opportunities talk to your financial adviser or contact us. Research has shown Australians are worryingly underinsured. 1 One reason is many people under-estimate the financial impact their death, illness or injury could have on them and their family. Others are aware of the risks, but don t think they can afford additional insurance. But that doesn t have to be the case. There are a range of things you could do to make insurance more affordable and get the level of protection you need for yourself and your loved ones. This brochure is designed to give you a better understanding of the options open to you. Did you know? Based on current average levels of insurance, the typical Australian s weekly family income will be cut to about $600 if the main breadwinner becomes temporarily ill or injured and can t work. Source: Lifewise/National Centre for Social and Economic Modelling, Financial Services Council, Securing Australian s Financial Wellbeing, Smart strategies to make your insurance more affordable Page 3

3 Strategies at a glance Strategy Suitable for Key benefits 1 Pay for insurance without reducing your cashflow. People who want to purchase insurance but don t have enough cashflow to pay the premiums. Get the cover you need. Use your cashflow for other purposes. 2 Protect your family by taking advantage of available tax concessions. 3 Protect your income cost-effectively. People with sufficient cashflow to pay insurance premiums who are looking for an effective way to go about it. People wanting to protect their income in a cost-effective manner. Make the premiums more affordable. Get the cover you might otherwise not have been able to afford. Make the premiums more affordable. Did you know? If you were on an annual salary of $55,000, and spent the same amount of time in the workforce as the average Australian male (around 43 years 2 ), you have a lifetime earning capacity of over $4.7 million. 3 Isn t that worth protecting? Sources: 2 Man Not at Work: An Analysis of Men Outside the Labour Force, Productivity Commission, Australian Government, January Assuming your salary increases each year by 3%. Page 4 Smart strategies to make your insurance more affordable Smart strategies to make your insurance more affordable Page 5

4 Strategy 1 Pay for insurance without reducing your cashflow Strategy 2 Protect your family effectively If you re like most people and need to take out additional insurances, there s a way you can do it without reducing your cashflow. It involves: buying Life, Total and Permanent Disability (TPD) or Income Protection insurance inside a super fund, and arranging to have the premiums deducted from your existing account balance without making additional contributions to cover the cost. This strategy can help you afford insurance if you don t have enough cashflow to pay for it outside super. It could also free-up cashflow so you can take out other important insurances such as Critical Illness, which can generally only be purchased outside super. The trade-off is that you ll use up some of the money that could otherwise meet your living expenses in retirement. While this could impact your lifestyle when you re no longer working, think of what could happen to your family s lifestyle in the interim if the unthinkable was to happen. Without insurance, your family could run down their savings very quickly and face financial difficulty well before your intended retirement date. Did you know? While many people aren t aware of Critical Illness insurance, its importance can t be over emphasised. This is because Australian males and females between age 25 and 40 are, for example, three and five times respectively more likely to become critically ill than die. Source: Based on MLC claims experience. Tips and traps If you don t want to erode your retirement savings, you may want to buy Life and TPD insurance in super and make additional contributions to cover the cost (see Strategy 2). This could be more tax-effective than buying the insurance outside super. You may be able to reduce the cost of Critical Illness insurance if you connect (link) the cover to Life and TPD insurance held in super. If you have enough cashflow to pay for Life and Total and Permanent Disability (TPD) insurance, you may want to arrange the cover in your super fund and make additional contributions 4 to cover the cost. By using this strategy, you could take advantage of a range of tax concessions generally not available when insuring outside super. If you re an employee and you re eligible to make salary sacrifice contributions, you may be able to buy insurance through a super fund with pre-tax dollars. If you earn 5 less than 10% of your income from employment (because you re either self-employed or not employed), you can generally claim your super contributions as a tax deduction. This is regardless of whether your contributions are used to buy investments or insurance. If you earn 5 less than $46,920 6 each year and you make personal after-tax super contributions, you may be eligible for a Government co-contribution of up to $500 6 that could help you cover the cost of future insurance premiums. If you have a spouse who earns 5 less than $13,800 each year and you make after-tax super contributions on their behalf, you may be able to claim a tax offset of up to $540 that could be put towards future insurance premiums for yourself or your spouse. These concessions can make it cheaper 7 for you to take out Life and TPD insurance in a super fund, or help you get a level of insurance that, otherwise, might not have been affordable. Did you know? Of those with dependent children, 60% haven t got enough insurance to look after their loved ones for more than a year if they were to die. Source: Financial Services Council, Securing Australian s Financial Wellbeing, Page 6 Smart strategies to make your insurance more affordable Smart strategies to make your insurance more affordable Page 7

5 Strategy 2 Protect your family effectively Strategy 3 Protect your income cost-effectively Tips and traps If your spouse isn t working, you may want to: make salary sacrifice or personal deductible contributions into your super fund split some of these contributions into your spouse s super account arrange for your spouse to purchase insurance in their super account, and by doing this, you could make some significant savings that could help reduce the cost of insurance for your spouse. While the tax concessions outlined above will generally also apply when taking out Income Protection inside super, you may be better off buying this insurance outside super see Strategy 3. 4 Super contributions will generally count towards the concessional or non-concessional cap, regardless of whether they are used in the fund to purchase investments or insurance and penalties may apply if these caps are exceeded. 5 Includes assessable income, reportable fringe benefits and reportable employer super contributions. Other conditions apply. 6 These figures reflect legislation before Parliament that at 25 March 2013 had not been passed. 7 This will usually also be the case if the sum insured is increased to make a provision for any lump sum tax that may be payable on Total and Permanent Disability and death benefits in certain circumstances. If you want to protect your income in the event of illness or injury, there are a number of cost-effective ways you can do this. For example, if you take out Income Protection insurance inside super, you could: have the premiums deducted from your account balance without making additional contributions to cover the cost (see Strategy 1), or fund the premiums by making additional super contributions, where you could benefit from a range of tax concessions (see Strategy 2). Another option is to purchase Income Protection insurance outside super, where you ll have to pay the premiums from your own pocket, but can generally claim the premiums as a tax deduction. The best approach for you will depend on a range of factors; including your income and cashflow position. Did you know? Around 96% of working age people report serious health risk factors and, consequently, a long-term loss of income. Source: Australian Institute of Health and Welfare, Working age people report health risk factors, Tips and traps When taking out Income Protection insurance outside super, you may want to pre-pay 12 months of premiums. 7 Regardless of whether you purchase Income Protection inside or outside super, you could reduce the premium cost by selecting a longer waiting period (until the benefits become payable) and/or a shorter benefit payment period. 7 If you re paying Income Protection premiums on a monthly basis, you can t pre-pay them. However, you can pre-pay yearly or half-yearly premiums. Page 8 Smart strategies to make your insurance more affordable Smart strategies to make your insurance more affordable Page 9

6 Choosing insurance that s right for you Insurance can help your family meet ongoing living expenses if you were to suffer a total or permanent disability, critical illness or lose your life. Whether you re protecting your family or lifestyle for the first time or updating your insurance needs, we have a range of affordable solutions to take care of you and your loved ones for the long term. We offer the flexibility of four types of insurance and most are available inside and outside of super. The following table provides a snapshot of what each insurance type offers. Have you considered Whether your loved ones will be able to survive financially in the event of your death? What would happen if you couldn t work again because of an accident or disability? How will you make ends meet if you can t work due to sickness or injury? Appropriate insurance? MLC Life Cover to protect the ones you love. MLC Total & Permanent Disability (TPD) for financial security if the unexpected happens. MLC Income Protection to survive life s ups and downs. What does it do? MLC Life Cover helps your family protect their financial position if you die by providing your beneficiaries with an agreed lump sum. MLC TPD cover offers financial security by providing you with a lump sum if you suffer total and permanent disability and can t work again. MLC Income Protection insurance can provide a monthly benefit of up to 75% of your income to replace lost earnings if you can t work due to illness or injury. Where can you purchase the insurance? Inside or outside super. Inside or outside super. Inside or outside super. How you will pay your bills if you suffer a critical illness? MLC Critical Illness gets you back on track. MLC Critical Illness cover helps ease your financial worries by paying you a lump sum if you suffer a critical illness. This also provides you and your family with access to Best Doctors, the specialist medical information service. Outside super only. However, if you have insurance inside super, Critical Illness insurance can be connected. Speak to your adviser for more information. Page 10 Smart strategies to make your insurance more affordable Smart strategies to make your insurance more affordable Page 11

7 Why you can count on us With over 125 years of looking after Australians, you can be certain we re going to be there when you need us. Our claims philosophy Paying a claim to client in a prompt and efficient manner is what sets insurance companies apart. We make the claims process as smooth as possible for your client during their difficult times. It s reassuring to know you can trust us to treat them with the compassion they deserve, including promptly paying any benefits to which they re entitled. Did you know? In 2012 we paid out $566 million 1 in claims, which is around $1.55 million each day. As your circumstances change so do your insurance needs, so speak to your financial adviser now about insurance to meet your needs now and in the future. Worldwide insurance Our insurance travels with you, which means you re covered 24 hours a day, anywhere in the world. Keeping your insurance up-to-date We continuously look for ways to improve the features and benefits of our insurance, so you ll receive better protection. We regularly improve the terms and conditions of your chosen insurance and, whenever it doesn t require an extra premium, we add those improvements to your policy. All of this is why, year after year, we ve won awards for innovation and market-leading products. Need advice? You should seek advice before taking out MLC insurance, or altering an existing policy. A financial adviser can help you select the level of cover that best suits you and review any of your existing insurance policies. If you don t have an adviser, please call Changing circumstances? One of the amazing things about life is how quickly things can change. And when they do, it s important to reconsider your financial plans. What ever your new circumstances may be, it s important to view how your insurance needs may have changed. So, whether you ve had a baby, moved home, been promoted at work or are preparing the kids for high school, it s important to talk to an MLC adviser about revising your insurance strategy. Full details are contained in the current Product Disclosure Statement for MLC Insurance and MLC Insurance (Super) and are available at mlc.com.au Proudly supported by MLC. Lifewise is coordinated by the Financial Services Council and funded by special contributions from its life insurance and reinsurance members such as MLC. Insurance can help safeguard everyday life. But for most people the amount they have may not be enough to protect what they treasure in the event of an accident, sickness or death. Lifewise will show you how taking some simple steps now can help to secure your future. For more information go to: 1 This figure covers Retail and Group claims paid up to 30 September Page 12 Smart strategies to make your insurance more affordable Smart strategies to make your insurance more affordable Page 13

8 Important notes This booklet is published by MLC Limited (ABN , AFSL ), who has its registered office at Miller Street, North Sydney NSW MLC Limited is a registered member of the National Australia Group of companies. MLC is not a registered tax agent. If you wish to rely on this flyer to determine your personal tax obligations, you should consult with a Registered Tax Agent. Any advice in this communication has been prepared without taking account of your objectives, financial situation or needs. Because of this you should, before acting on any advice in this communication, consider whether it is appropriate to your objectives, financial situation and needs. You should obtain a Product Disclosure Statement or other disclosure documents relating to MLC Insurance and MLC Insurance (Super), issued by MLC Nominees Pty Limited and MLC Limited, and consider it before making any decision about whether to acquire or continue to hold the product. A copy of the Product Disclosure Statement or other disclosure document is available upon request by phoning the MLC Service Centre on , or on our website at mlc.com.au MLC Nominees Pty Limited (ABN , AFSL , RSE L ) of Miller Street, North Sydney, NSW 2060 is the issuer of MLC Insurance (Super) as Trustee for The Universal Super Scheme ( the Scheme ) R As Trustee of the Scheme, MLC Nominees Pty Limited is responsible for the management of the Scheme. MLC Insurance (Super) is part of the Scheme. When you obtain an interest in MLC Insurance (Super), you become a member of the Scheme. An interest in MLC Life Cover Super held through the Scheme does not represent a deposit with or a liability of MLC Nominees Pty Limited, MLC, National Australia Bank Limited (ABN , AFSL ) or other member companies of the National Australia Group of companies other than a liability of MLC as insurer. Neither National Australia Bank Limited, nor any other member of the National Australia Group of companies (other than MLC as insurer) guarantees or accepts liability in respect of MLC Insurance (Super). Best Doctors isn t insurance (including health insurance) and it doesn t replace your relationship with your current doctor or medical specialist. MLC reserves the right to withdraw the service at any time or to change the terms on which the service is provided to customers. Copyright Best Doctors. All Rights Reserved. At this time of year a little planning can make a big difference to your financial position. Ask your financial adviser which of these strategies best suits your needs, because a successful outcome always comes down to finding the right strategy.

9 Insurance from MLC For more information call MLC from anywhere in Australia on or contact your adviser. Postal address: MLC Limited, PO Box 200 North Sydney NSW 2059 Registered office: Ground Floor, MLC Building Miller Street North Sydney NSW 2060 mlc.com.au 76060M0413