FS360 Episode 16 - Personal Insurance

In Episode 16 of the FS360 Podcast, Thayne talks about the five insurance policies available for individuals. The first is life insurance, which is a lump sum paid in the event of death or terminal illness. The second is total and permanent disability (or TPP) for when you are unfit to work again, which is a lump sum payment depending on your financial and family circumstances.

The third is trauma insurance, which is a lump sum amount depending on which amount you have chosen to be covered for. Thayne says there are usually around 40 insurable events for this, the main ones including heart attacks, strokes and cancer.

Income protection insurance is the fourth, which is available when you are unfit to work for a period of time. You can be paid 75 percent of your monthly salary up until the age of 70 with this insurance. The last policy is business expenses which is for those that are self-employed and are unfit to work. It will cover your fixed costs within your business up to the amount you have nominated that you want to be insured.

Income protection and business expense are tax deductable to the individual as well and if life and total and permanent disability covers are structured through superannuation, they can be claimed as a tax deduction too.

Thayne says that if we are insuring our car and house, then life insurance needs to be included in this.

“Your claim for a car might be $60 000 to $70 000 or less, but if you aren’t able to work or generate an income then depending on the length of time … the financial impact can be much more detrimental,” he said.

Thayne explained that there is life insurance covered in your superannuation fund, however they are not personalised. These policies have a default amount of insurance cover in them, which is usually selected based on a formula like how old the individual is and what the superfund deems appropriate.

He says this is what the professionals at Mulcahy & Co Financial Planning can assist people with.

“Given that humans are different, financial situations are different, family scenarios are different, it’s recommended that people review their personal insurance needs and make sure that it is adequate, because most of the default insurance cover is very minimal,” he said.

Some people may be sceptical because of the myth that insurance companies don’t pay up and the process is hard. Thayne says this isn’t true and that people should make the most of their policy.

“Over $12 billion was paid out in 2019 from insurance policies and over 95 percent of all claims were accepted. So, with the myth that … insurance companies don’t pay out, they well and truly do,” he said.

Podcast Attendees

Gavin Nash – Director of Marketing, Mulcahy & Co

Thayne Turley – Director of Financial Planning, Mulcahy & Co

Article by Ollie Nash