Financial Protection

Delivering you financial peace of mind

Don’t let bad luck decide your financial future. Financial protection insurance is often overlooked when developing a financial plan, although it is one of the best forms of protection against life’s calamities, including financial hardship caused by serious illness, injury or death.

 What types of financial protection are available?

Nobody wants to think about morbid "what if" scenarios. But, what if you fall ill or get injured and as a result can’t work? What happens to your family in the event of your death? By investing in financial protection, you are putting a contingency plan in place, ensuring the worse case scenario is avoided.

There are a number of financial protection options available. The information below should be used as a guide only. The best choice for you will be entirely dependent on your unique circumstances. A professional financial planner can help you determine what is right for you.

Income Protection

What is your greatest asset? Most people typically respond that their home, their car, or their investments are their greatest assets. However, your greatest asset is actually your ability to earn an income.

Most of us rely on our income to pay the mortgage or rent; to keep ourselves and our families clothed and fed; and maintain a comfortable standard of living. So protecting our ability to earn an income should be a high priority. Yet, while many of us insure our homes and possessions, we often ignore protecting our income. An income protection policy will pay a regular income if you are unable to work because of sickness or injury. Whether the disability is as serious as cancer or as minor as a broken arm, income protection provides a simple, cost-effective safety net.

Most policies will pay up to 75 per cent of your average monthly income (net of business expenses but before tax), and will cover you against various conditions, which could disrupt your ability to earn an income.

Income protection is particularly important to the self-employed, who cannot rely on short-term sick leave from an employer.

Business Expense Protection

Business expense protection covers your business against fixed costs like rent, lease arrangements and non-income producing employees’ salaries, should you or your partner suffer a serious sickness or injury.

Life Insurance

A life insurance policy provides financial assistance in the form of a lump sum to your family or other dependents in the event of your death. The proceeds can be used to meet your family’s outstanding commitments, such as the mortgage on the family home, and to maintain your family’s standard of living.

There is no doubt that no price can ever be put on the value of a human life. However, life insurance is a safety net that allows your family to cope financially if you or your partner died. In what would be an emotionally devastating time, life insurance removes one major stress – financial insecurity.

Term life insurance provides death cover only - if the life insured does not die within the specified term, by age 65, for example, the policy is cancelled and there is no surrender value. This type of policy has no savings or investment component - it is only a means of managing risk.

Ensuring you have adequate life insurance for your individual circumstances can be a difficult task. A financial planner can help you by highlighting areas to consider when calculating the amount of life insurance that you require.

Trauma Insurance

Most of us know of someone that has suffered from a serious illness. While modern medicine can provide many people with a good chance of recovery, the financial consequences of a serious illness can be devastating. Bills for example don’t stop, just because you’re ill. A serious illness, such as cancer, a stroke, a heart attack or any one of a number of other major illnesses, can strike at any time, causing physical and emotional trauma.

For those recovering from such an illness, or facing a lengthy period of incapacitation or recuperation, there is often the financial burden of medical bills and expenses, the ongoing costs of rehabilitation and care, possible modifications to the home, and forced early retirement.

Few people have the necessary savings to pay all these expenses or to manage without a regular income.

Trauma insurance can offer relief by paying a lump sum in the event of a specified condition, helping to ease the financial burden on both the insured and the family.

Business Expense Protection

Business expense protection covers your business against fixed costs like rent, lease arrangements and non income producing employees’ salaries, should you or your partner suffer a serious sickness or injury.

The plan can cover you for up to 100 per cent of your eligible fixed expenses while you are unable to work due to sickness or injury.

What are the benefits of financial protection?

The following information outlines the ways that financial protection insurance can help minimise the financial impact of suddenly being unable to earn your regular income. This information is only a guide. For an accurate analysis of your personal needs, consult your financial planner.

Situation : A major medical trauma, eg. a heart attack, cancer or stroke.
The statistics: One in three men and one in four women will develop cancer before the age of 75.1
Result: Family/loved ones must cope with increased financial burden of your medical costs, as well as the reduction in family income for an unknown period of time.
Financial protection solution: Trauma insurance
Description: If you suffer from any of the specified traumas, your trauma policy will pay a lump sum benefit to help ease the financial strain on your family - leaving you free to concentrate on your recovery.

Situation: Disability through an accident or a substantial period of time away from work due to illness or injury.
The Statistics: The chance of a 35-year-old male becoming disabled for one month or more prior to age 65, is 68 per cent. For females, statistics are even greater at 69 per cent.2
Result: Loss of income means it may be difficult to cover outstanding debts and maintain your current lifestyle.
Financial Protection Solution: Income protection
Description: Income protection cover offers up to 75 per cent of your gross income (net of business expenses but before tax) if you’re unable to work due to sickness or injury.

Situation: Accident or illness stops you from running your business.
Result: Your business’ profitability may suffer and you may experience a substantial decrease in your income.
Financial Protection Solution: Business expenses protection
Description: Business expenses protection allows you to recoup a range of allowable expenses that your business is likely to incur if you become totally disabled.Situation: Premature death
Result: Your family left to cover any outstanding debts.
Financial Protection Solution: Life insurance
Description: In the event of death or the diagnosis of a terminal illness, your life insurance policy will pay a lump sum to your loved ones.