Insurance

Why beneficiaries are SO important

December 9, 2015 By Paul Davies

Why Beneficiary nominations are SO important!

A recent case from the Supreme Court of South Australia, involving Both Mr Hassan and his wife, who were the only members and also trustees of their Self Managed Super Fund (SMSF) shows the importance of advisers in planning for your beneficiaries.

This case, as you will see, highlights the need for detailed advice, both with the estate planning lawyer and a life insurance adviser experienced in estate planning.

The case involves Morris Hassan, who was married to his second wife Margaret Hassan and had children from his previous marriage.

Before Mr Hassan died, he made a document stating that he wanted his super to be split between his children and second wife exclusively.

On face value, the document seemed to be a binding one, and was signed by two witnesses.

Unfortunately, when Mr Hassan died that document was brought into question, as Mrs Hassan did not believe she had to pay the children their third share (legally). It seems her relationship with the children was not as close as his.

Mrs Hassan argued that the document was not a binding nomination form that aligned itself with the current trust deed.

All parties went to the Supreme Court, which haven’t publicised the outcome, but there are some key lessons learned from this story:

1) The trust deed was written without a strategic plan in place. It was a general trust deed and did not take into account ‘other’ documents that outlined the wishes of the deceased.

2) Selecting the right person to control the super fund in the event of death or disability.

3) Have the right life insurance adviser in place to ensure benefits are distributed in line with the trustee and your particular plan.

The moral of the story is that if you have an SMSF and/or you are part of a ‘blended’ family, please make sure you speak to a solicitor who is experienced in estate planning law.

To speak with a trusted adviser call 1800 674 435 or EMAIL US

How to save on your insurance premiums

December 9, 2015 By Paul Davies

Balancing the effectiveness and affordability of your personal insurances is a key goal in the financial planning process.Here are some money saving tips to consider if you want your cover to be both comprehensive and cost-efficient.

But how can you keep the cost of cover down without compromising your protection? How can you retain adequate levels of cover if your budget is suddenly under pressure? Fortunately, there are several options open to you for making sure your premiums are kept to a minimum.

Streamline the structure of your cover

The first place to look for savings is to analyse how your cover is structured to see if it can be organised more efficiently. Even minor tweaks to your strategy can make savings that really add up.

One such option is to have your Life, TPD and Income Protection Cover held within superannuation through an insurer’s Super Fund.

You can then arrange with your employer to salary sacrifice to fund the premiums, which effectively means you arepaying your insurance with pre-tax dollars.

Alternately, you may even fund annual premiums via a tax-paid rollover from any complying super fund, which again allows you to fund premiums more tax-effectively.

A change of premium payment frequency can also reap surprising savings. For example, if your cashflow allows you to pay premiums annually it can save 8% compared to paying monthly.

Consolidating cover from other insurers into your cover with the insurer may result in savings by way of our large benefit amount discounts and eliminating any duplication of policy fees.

Seek opportunities for health related premium reviews

You may be able to arrange a reassessment of your premiums if there have been improvements in your health and lifestyle. Perhaps you were a smoker when you took out your policy, but have since given up for at least 12 months. You can sign a declaration and apply for a review, which can potentially save up to half the cost of your policy as a smoker.

Similarly, if your original cover had premium loadings related to your weight, previous medical conditions or hazardous pastimes, then any positive changes to these factors may mean it is worth asking for an underwriting review to remove the loading.

Some insurers now also offer an annual reward for taking part in fitness regimes, etc.

Consider options for limiting cover

There are several possibilities for adjusting cover levels to help contain premium costs, although these should only be considered as “last resort” approaches if circumstances become difficult. They should also be done in consultation with one of our advisers to ensure your protection is not unduly compromised.

One simple option is to decline your annual CPI increase in cover. Limiting cover in this way will avoid increased premiums that are associated with increased cover levels.

Contact one of our advisers on 1800 674 435 or EMAIL

Australian Super increase insurance rates

December 9, 2015 By Paul Davies

After a relentless campaign against independent financial advisers over the years, generalising specific areas of competition that brought advisers competency in to question, they now need to eat their own words as many retail life insurers are now cheaper than Australian Super.

Do you have Australian Super? Would you like to see if you can save on your premiums & still pay from super? Click Here to send details and we can look at a comparison for you.

For the second time in 12 months, industry fund AustralianSuper has increased insurance premium rates for its members.

The new rates are effective from 29 March 2014, and apply to death, TPD and income protection cover. The increase in cover rates varies depending on the member’s age, choice of cover (units or fixed cover) and their occupation.

In a letter to its members AustralianSuper said the cost of insurance continued to rise in Australia, resulting in a need to increase rates. The fund linked the premium rise to the increased number of claims paid by insurers, driven by higher unemployment rates and growing consumer awareness of insurance. Changes to regulatory requirements and the amount of money that insurers needed to hold in reserve were also a factor, the fund said.

AustralianSuper also advised it would be reviewing its insurance rates annually, instead of every three years as is common in the Australian market. The fund said this may not necessarily result in annual premium increases, but would offer greater stability for members who may have previously experienced significant increases and/or decreases in their costs.

In June 2013, the super fund increased its rates by approximately 20-25%

Parents piggy back rider

December 9, 2015 By Paul Davies

Stuff that lands in the “cool for dads” category usually makes you cringe but the Piggyback Rider is pretty cool. It’s an effortless way to carry a kid over 2-and-a-half or up to 30-kilos. A comfortable harness system that features a no-slip foot bar, gives your grom a better view and keeps them right where they want to be. via

SMSF Insurance – Don’t get fined!

December 9, 2015 By Paul Davies

With almost 500,000 Self Managed Super Funds (SMSF) being set up in Australia, there is an increased concern within government and industry that some clients may not know the extent to which they need to be compliant.

One area in particular that is of concern is that of adequate protection within your SMSF. When moving super out of the retail funds such as industry funds, the automatic insurance that was linked to the account is lost. To some, this may not worry them, but if borrowing within the super fund, like so many have done thus far, the area of ‘Liquidity‘ becomes a very important factor.

If you have borrowed within your super fund, and you are the main ‘guarantor’ on the loan, then on your death or permanent disability, the bank will ‘Call the Loan’, simply because they want to make sure they are paid when you are no longer here.

What happens when the bank calls the loan on your death?

In order for you, your family or your estate to pay the loan back to the bank, you need money. This seems simple enough.

But where is that money going to come from? You can do one of two things:

1) Sell the asset in your super fund at that time (This would be at a fire sale rate as the funds are needed immediately, potentially selling for under market value) or;

2) SMSF Insurance – Take the proceeds from a life insurance benefit to pay out the lender, retaining the asset (property, etc) within the fund, to be paid to your estate/beneficiaries, etc)

If you have more than one person or a couple within your SMSF:

If you have other family members within your SMSF, and the fund needs to pay your portion of the estate out, the remaining members share will drop dramatically. Insurance for the amount needed to ‘buy out’ your share of the SMSF for your estate is vital in keeping within the laws.

The law says you ‘Must consider life insurance within the fund’. It is not mandatory as far as considering insurance, but taking into account the points above, you may find that by not taking into account liquidity issues actually impacts on your compliance of the fund and you could find yourself in big trouble with a very expensive story to tell to the regulator.

How do you know if you are complying with this part of the regulations?

Firstly, speak with your accountant, who is ultimately responsible for the advice you receive on your SMSF, but also contact us if you have any doubts. We can give you some points to consider and some figures to determine whether you can afford Not to have protection within the fund.

For more details on SMSF, see our other post on SMSF’s https://www.jarickson.com.au/self-managed-super-fund-trustee-which-to-choose//

Call 1800 674 435

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