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Financial Advice

Insurance & Wealth Protection

For the majority of people, the foundation of any financial advice should be looking to protect the family and/or business in the event that anything happens to the principal bread winner.

How RFS Advice can help with insurance & wealth protection

The first step should always be Estate Planning. RFS Advice works closely with a number of legal specialists in this area and like many things, all estate planning specialists are not equal. When you know who should be receiving what and what tax structure will be the most effective way of bequeathing it to them, then we get involved in the how much and how to fund it.

This is the same for businesses and families. All too often we find clients with policies that are:

  • incorrectly structured;
  • owned by the wrong beneficiaries;
  • triggering unintended tax consequences at claim time.

Even more worrying, are instances of clients paying for policies that provide benefits they are not eligible for a very nasty surprise at claim time!

The objective of having insurance cover over your life and your assets is to provide yourself, your business and your family, financial certainty in the event of death, illness or accident.

Insurances have often been called the ‘Instant Estate’. As you accumulate assets, the need for life insurance can actually decline. Life insurances are only needed when you do not have the assets to pass on to beneficiaries.

In the latter part of your life the insurances that play an increasingly important part in your plans will actually be Trauma Insurance and Income Protection. These Insurances are triggered in the event you survive a critical illness or accident and are unfit to continue employment or have an extended period of unemployment.

Business Protection

It is important to understand who will benefit from a policy and how that benefit will be passed to a beneficiary. 

In the case of businesses it is important to cover the loss of revenue due to a ‘key’ person either dying, or being unable to contribute to the business for an extended period. Could your business cope with one of the partners no longer working in the business and what would be the impact on revenue? Fixed costs will remain so you need to replace that revenue.

Additionally if something should happen to a business partner/owner, their beneficiaries quite rightly would expect compensation for the deceased’s share of the business. Quite often, the only way to release the necessary capital is to borrow against the business or sell the business, usually in a distressed state. This can be insured against and then the question is who should pay the premium and who should own the policy?

The business protection questions that need to be asked:
  • What would the impact be of losing a key person?
  • Who would need to be compensated?
  • How would the business replace lost revenue?
  • Who should pay the premium?
  • Who should own the policy?

All can be managed with appropriate planning and we have advisers who specialise in this area and will work with your lawyers to ‘bulletproof’ your business.

Family Protection

What would happen if you died today or had a serious injury or illness that prevented you from earning income? 

  • Would you lose the family home?
  • Could your children continue at their current schools?
  • Would your family have to dramatically change their lifestyle?

If something happened to both you and your partner, who would look after your children?

  • Who would manage their estate?
  • Would their guardians need to move house?

Insurance can never replace you but a properly constructed program will ensure that your family will only have to deal with the emotional stress of the event without concern for their financial security.

Insurance policies explained

There are four major types of personal insurance to consider. These include: Term life insurance, Total and Permanent Disability (TPD) insurance, Trauma (or Critical Illness) insurance and Income Protection insurance.

Term Life
Insurance

Total & Permanent Disability Insurance

Trauma or Critical Injury Insurance

Income Protection
Insurance

Life cover insurance

Life Cover pays a lump sum upon the death of the life insured, which provides protection for one’s loved ones. In the event of the policy holder’s death the lump sum can assist in paying off any outstanding debts such as a mortgage, or investment debt. The cost of Term Life cover increases as you get older, however the older and more established your financial position is, the less insurance you may require. Therefore, it may be possible to reduce your insurance over time to minimise costs but maintain protection for yourself and your loved ones. After consideration of your personal circumstances, goals and objectives, and existing debts, we will provide a recommendation that enables your family to pay out any existing debts, final medical and funeral costs and have adequate capital to set up an income stream to assist with their future lifestyle costs.

Total and permanent disability insurance

Total and Permanent Disablement cover (otherwise known as TPD cover), is designed to payout a lump sum payment if you have become permanently disabled.  Generally, the definition to claim under TPD cover, is that you will never return to work again in your own or any occupation.  TPD cover provides you with financial relief when you have suffered a permanent disablement.  After considering your personal circumstances, goals and objectives, we can provide you with a recommendation that can help you pay off your debts, assist with medical bills, make home alterations, provide you with an income stream etc.

Stand alone recovery / trauma / critical injury insurance

A life threatening sickness or injury has wide-ranging repercussions for any family. It can prevent one from working, or keep them in need of constant medical care. A recovery insurance policy gives some security in these circumstances as it provides a lump sum payment in the event of the life insured being diagnosed with certain medical conditions, undergoing certain medical procedures, or becoming totally and permanently disabled. This payment can be used to pay medical expenses, replace any lost income, or generally take the financial pressure off the insured (and their family) during the trying time following the occurrence of an insured event.

This form of insurance becomes increasingly important in the latter part of you life as you may have established an estate to look after loved ones but not protected yourself in the event of loss of income or a debilitating illness. Who will look after you?

Income protection (IP) insurance

Probably the most crucial and flexible insurance, Income Protection is designed to replace up to 75% of the policy holder’s income if they are unable to work due to sickness or injury. One’s most valuable asset is the ability to produce an income and this must be protected. There are basic policies, which might be limiting in the time of a claim, and then there are extended, or plus policies which are preferred. Importantly, the cost of income protection is fully tax deductible. The cost varies significantly based upon the waiting period, benefit period, amount of income insured and the insured occupation. An appropriate Income Protection policy is designed to pay the insured a benefit if an insured event occurs, such as you becoming severely disabled due to sickness or injury.

Make an enquiry today

If you think you could use some assistance in adequately protecting yourself and your family, don’t put it off any longer. Phone or email to make an appointment with our risk specialists. The initial meeting is done at our cost and you will know whether we can help you before you decide to proceed with the advice process.


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