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Frequently Asked Questions
This guide will assist you in purchasing the most suitable cover. If you have others, please contact us for a prompt response.
Term Life Insurance
What is Term Life Insurance?
Why do I need Term Life Insurance?
How much Term Life Insurance should I have?
Who should own the policy?
Can I add Term Life Insurance to my SMSF?
Income Protection Insurance
What is Income Protection?
Why do I need Income Protection?
How much Income Protection do I need?
What features should I look for in an Income Protection Policy?
How important is my occupation in determining my premium?
Trauma Insurance (Critical Illness Cover) ? Personal Policies only
What is Trauma Insurance?
Why do I need Trauma Protection?
If I have Income Protection, why do I also need Trauma cover?
Why have the Insured Trauma Events been singled out?
How does Trauma Insurance work?
How much Trauma Protection should you have?
Purchase Information
Can I increase my level of cover?
Will I need a Medical Examination?
Will I be required to provide financial information?
Can I change cover from another insurer?
Term Life Insurance
What is Term Life Insurance?
It is a type of policy which provides a lump sum payment to your loved ones on your death or on diagnosis of a terminal illness. It is the least expensive form of life cover. You may also need to provide for an amount to be paid to you upon diagnosis of a total and permanent disability. Total & Permanent Disablement (TPD) is a low cost option where Income Protection or Trauma Insurance is too expensive or unavailable due to a person's occupation or health.
Why do I need Term Life Insurance?
Term Life insurance provides vital protection to cover your dependants against outstanding debts, eg. a home mortgage or personal, business or investment loans should you die. It is also taken as a means of creating a capital sum for investment to provide a regular income for your family or partner should you no longer be able to do so because of your premature death or total and permanent disability. If you are a Home Keeper, you should also be protected. It makes good sense to also cover your loved ones against your premature death or total and permanent disability.
How much Term Life Insurance should I have?
The amount of cover required will vary according to your individual needs. As a minimum you should own enough life insurance to clear all your personal or business debts plus any funeral or death related expenses. To protect and provide for your dependents you should have additional cover to the equivalent of 10 times your present income. For families the higher cover will be needed for the main income earner. For one income families, a Home Keeper should insure for half this sum. This amount would enable your family to maintain their current lifestyle using the income generated by investing the lump sum they would receive upon the death of either parent.
Who should own the policy?
You should. However, to protect your dependants you can complete and a nomination of beneficiary form. FCA recommends you seek independent advice in this regard.
Can I add Term Life Insurance to my SMSF?
Yes, as a result of changes announced in the 2006 Federal Budget, Reasonable Benefit Limits (RBL's) have been removed providing significantly improved tax benefits for trustees and members of SMSF's. If you are a trustee or member of an SMSF then the policy should be owned by the fund. Increasing levels of insurance cover within an SMSF is now widely recognised as a tax effective strategy.
Income Protection Insurance
What is Income Protection?
Income Protection is an insurance policy which provides you with an income if you are unable to work because of a serious illness or injury. The benefits are paid monthly for the period of incapacity or the duration of the policy whichever is the shorter period.
Why do I need Income Protection?
If you become ill or injured your regular income will soon cease but your living expenses will still have to be paid. In order to protect yourself, partner or family you should purchase an income protection policy. It is essential if you are self employed.
How much Income Protection do I need?
Most policies enable you to cover up to 75% of your present gross salary or taxable income and, although you can nominate a lesser amount, most people take out maximum cover.
What features should I look for in an Income Protection Policy?
Your policy should include the following benefits:
- Guaranteed Renewable
- Agreed Value Contract
- Own Occupation Definition on Claims
- Increasing Benefit on Claims
- Indexation of Insured Benefit
- 24 hour World Wide Cover
How important is my occupation in determining my premium?
It is one of the most important factors in determining your premium rate. Certain occupations are expected to create a higher percentage of claims and therefore a higher premium is charged for these occupations.
Trauma Insurance (Critical Illness Cover) – Personal Policies only
What is Trauma Insurance?
Trauma or Critical Illness is a type of policy which pays you a lump sum if you are diagnosed as suffering from one of many medical conditions or procedures. The major illnesses or serious accidents covered vary from policy to policy, but most include cancer, stroke, heart attack and coronary disease. Most policies also offer optional death and/or permanent disability cover.
Why do I need Trauma Insurance?
A major illness or serious accident usually causes emotional and financial hardship particularly if the principal income earner or home keeper is involved. These days many people prefer to insure against the high cost of recovery and expenses associated with a major illness or injury rather than death cover only.
The facts are: if you are now in your Twenties your chance of suffering a major health problem before you are 65 is as high as one in four. The likelihood of this occurring then increases as you get older.
If I have Income Protection Insurance, why do I also need Trauma cover?
Income protection cover will provide you with a monthly benefit for the period of your disability but it will not provide the peace of mind that only a lump sum gives, eg. you can pay off your mortgage or other personal or business debts. Trauma insurance is not an alternative to Income Protection but together they provide the best cover obtainable.
Why have the Insured Trauma Events been singled out?
The Traumas have been selected as being the ones which make up the most common serious illness or accident cases. The most common traumas that occur in Australia are: Cancer, Stroke, Heart and Coronary Artery By-Pass surgery. In addition, up to 28 other trauma events can be covered.
Statistics show that a male aged between 18 and 65 years of age has a one in four chance of suffering one of the above traumas. Naturally we cover these traumas, in addition a further 16 events are covered. To reduce your premium we only cover the traumas specified.
Heart Attack
In 2006 the Australian Institute of Health reported cardiovascular disease (CVD) as the leading cause of death and disability in Australia.
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Around 3.67 Australians are affected by CVD |
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1.1 million Australians are disabled long term by CVD |
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Nearly 20% of Australians have a disability caused by CVD |
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CVD conditions increased by 18.2% over the last decade |
Stroke
In 2006 the National Stroke Foundation reported that 48,000 Australians have a stroke each year, which equates to a stroke occurring every 11 to 13 minutes.
Cancer
It is expected that 1 in 3 men and 1 in 4 women will be diagnosed with a malignant cancer in the first 75 years of life.
Coronary By-Pass Surgery
Between the age of 18 and 65 approximately 2.7% of the population will have by-pass surgery.
How does Trauma
Insurance work?
Many illnesses can now be cured, but recovery still takes time and money. By paying you a lump sum, trauma protection frees you from financial worries such as mortgages or business and personal debts. This enables you to concentrate on getting better and staying better.
Employees need a separate policy because most trauma events cannot be paid from a Superannuation Fund. It's also ideal for people who are ineligible for Income Protection Insurance, such as Home Keepers, people in high risk jobs, or when the cover available through Income Protection is insufficient.
How much Trauma Protection should you have?
As a minimum the amount of cover should be sufficient to pay all your living expenses during a lengthy illness. Ideally the benefit should be equivalent to the total of all debts plus two years total income.
Purchase Information
Can I increase my level of cover?
You can increase the level of cover by request. The increase is subject to meeting our selected insurers medical and financial underwriting requirements. We will forward an application to you to complete the increase required. Usually there will be no additional policy fee at the next renewal date.
Will I need a Medical Examination?
Only if your personal health or pursuits require further examination or the amount of cover required exceeds our non-medical limits. Our medical requirements of our selected insurer are fully displayed on the Product Disclosure Statement. Access to this important document can be obtained by following the steps under the how to apply page of this website.
Do not arrange a medical examination until after your application has been considered by our selected insurer. If required we will contact you and forward a Medical Examination Report for completion by you and your doctor. The cost of the medical examination will be paid by the insurer.
Will I be required to provide financial information?
Depending on the amount of cover required you may have to answer a financial questionnaire or supply an accountant's report. If required, a form will be forwarded to you. The questionnaire will be forward to you after your application has been considered by our selected insurer.
Can I change cover from another insurer?
Yes. You can apply to change cover by completing and signing an application. You should be careful to ensure that that any replacement cover is suitable for your needs and that you are aware of any qualifying period for some benefits. You should not cancel an existing policy until after your application has been accepted and you have received the replacement cover.
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