ADAPTABLE INSURANCE FOR LIFE. INSURANCE INSIDE SUPER. Case studies include the Total Care Plan Super Rollover discount (TCPS RD)

Transcription

1 ADAPTABLE INSURANCE FOR LIFE. INSURANCE INSIDE SUPER Case studies include the Rollover discount (TCPS RD)

2 Adaptable insurance for life. s needs and budgets can change they move jobs, get married, have children, transition to retirement. That s where CommInsure s inside super insurance offering steps in allowing you to balance effective insurance solutions and provide more affordable options for your clients varying needs. Securing your clients financial future is important, but with many Australians choosing to tighten their belts and cut spending, insurance can be one of the first things to go. But that doesn t have to be the case. Holding insurance inside super can provide a viable solution for your cash-strapped clients by allowing them to fund premiums via their existing super account balance, or by making pre-tax contributions into super. In fact, you can offer your clients cover inside super, outside super, or a combination of both with CommInsure s Flexi-linking and Split TPD functionality both of which are available via (TCPS) or the SMSF Plan. And if your clients budget changes and cash flow is no longer a concern, CommInsure s continuation option offers you the ability to easily move cover outside the superannuation environment, without having to provide any further health evidence. CLIENTS BEST INTERESTS Flexibility Flexi-linking allows for inside/outside super combinations. Payment options cash, direct debit, any complying fund rollover. Standing authority on rollovers. Continuation options no additional underwriting. Can add or remove options. SIS-aligned agreed value income protection. Affordability Discounts - SPM/Renewal Reward/Top-Up. Potential tax deductibility of premiums to the trustee. Not out-of-pocket pay from your super. Competitive premiums. Flexibility to remove options to make it more affordable. Flexi-linking allows for inside/outside super combinations. Other benefits Day 1 cover. SIS aligned what you see is what you get. Claims strength. 3

3 Funding premiums without reducing cash flow. Holding insurance inside super can provide a viable solution for your cash-strapped clients by allowing them to fund premiums via their existing super account balance. Super Payment Method (SPM) is CommInsure s rollover payment facility that automatically transfers money from your client s superannuation balance to pay their insurance premiums each year. Your clients can choose from any complying super fund to rollover premiums. By using SPM, clients will receive an ongoing Renewal Reward of up to 15 per cent when they renew their policy each year using rollover monies. In addition, an instant 15 per cent discount on their premiums may be available through SPM15 Plan code. ^ benefits include Renewal Reward * Cumulative saving over the life of the policy # SPM15 discount does not apply to the policy fee Note: the SPM15 discount does not apply to the policy fee. Quote based on 30 year old male, NSW, non-smoker, annual, stepped premium, super professional occupation, any occupation TPD, indemnity IP, 1 month waiting period, benefit period to age 65, increasing claim option, includes $75 policy fee. Correct as at 26 July Year 1 Dean s Story Dean is a 30 year old accountant living in Sydney who earns $85,000 per year. Dean has a comprehensive Plan Super package including $1m of both Life and TPD cover as well as income protection for $5,000 per month. Dean s premiums are paid via SPM and he has also signed a standard authority to automatically rollover each year on renewal. Year 5 Year 10 to age 64ˆ Year 1 premium $1, Year 1 premium $1,119 $183 $183 $183 $183 with SPM15 # Year 1 premium with SPM15 & 5/4/3/2/1 Year 1 premium with SPM15 & 5/4/3/2/1 and RD $1,057 $245 $368 $368 $368 $995 $307 saving $1,417 saving $2,876 saving $46,964 saving* Your clients can also preserve their disposable income by funding premiums from personal or employer pre-tax super contributions, including: Concessional contributions Superannuation Guarantee contributions Salary sacrifice. We also accept a wide range of other contributions including non-concessional (personal) contributions. Adele s Story Adele is a 48 year old university lecturer who earns $100,000 per year. On the recommendation of her financial adviser, she is looking to take out $1 million of life and TPD insurance and income protection of $75,000 p.a. She is able to salary sacrifice some of her employment income and is wondering if she should have insurance inside or outside of super. By having insurance inside super, and utilising salary sacrifice contribution, the maximum tax payable by the super fund on Adele s superannuation contribution would be 15 per cent. Insurance product Annual premium super Inside super (net of notional cash flow savings*) Notional cash flow savings** Life & TPD $1,350 $1,350 $1, $ Income Care $2,648 1 $2,648 $2, $ Total $3,998 $3,998 $3, $ Based on a 48 year old female (49 next birthday), non-smoker, living in NSW, stepped premiums and a $6,250 monthly Income Protection benefit. Monthly premiums are correct as at 26 July * Assuming a marginal tax rate of 38.5% (inclusive of Medicare Levy) ** Her notional cash flow savings represent the difference between her marginal tax rate (38.5%), which may have applied to the salary sacrifice contribution to the super fund and the actual tax on contributions payable by the super fund (15%). 5

4 Linking cover inside and outside of super. CommInsure s Flexi-linking enables clients to link to covers not allowable under super, such as Trauma Cover and Total and Permanent Disability (TPD) with an own occupation definition. Whatever your client s financial position, Flexi-linking allows you to explore many cover options to suit both their protection needs and their back pocket, by enabling clients to purchase packaged priced insurance across super and non-super policies under one policy fee. Similarly, Split TPD Cover provides clients with the advantage of having part of their TPD under Cash strapped See how it works Cash cautious super, linked to the more generous TPD own occupation definition outside super. Flexi-linking is suitable for a range of clients including individuals, families and Self-Managed Super Fund members. The following three case studies are modelled on our Flexi-linking affordability scenario diagram. This diagram can assist you in exploring all the options to ensure your clients cover combination will maximise cash flow, enjoy premium savings and provide your client with the best cover to suit their needs. Cashed up Matt and Erika s Story Matt and Erika, both 35 years old, are cash strapped clients. They are married with two kids and Erika is currently caring full time for their children while Matt works as a Sales Representative. They have limited income with high expenses, leaving little income to spare. Matt (any occ) Income Care Super Erika (homemaker) Inside David and Reina s Story David and Reina, both 35 years old, are cash cautious clients. They want to see value in their insurance cover. David and Reina want to minimise their out of pocket expenses but not lose features and benefits. While they have a high income, their expenses are also high, making them careful with how they use their money. David (any occ) Reina (homemaker) Inside With limited income, Matt and Erika pay an annual premium via a rollover from their superannuation balance: Flexi-linked Plan David Trauma flexi All cover in super. Married with kids. One parent working, and one caring full time for children. Limited income with high expenses. = Little income to spare Many clients - income could range from $20,000 pa to millions. These clients want to see value. They want to minimise out of pocket expenses - but not lose features and benefits. DINKS or empty nesters. Want the best options. Don t want to erode their SMSF or super balance. May have already reached contribution caps. May be of use for clients with estate planning needs. Anual Matt Erika TCPS premium $ $ TCPS premium with Rollover discount Super $ $ Reina Trauma flexi Income Care Range David Income Care Plus* 6 High income but with high expenses. = Careful with how they use their money = Can utilise more traditional product combinations 100% 0% Premiums based on $1 million Life/TPD cover (any occ), male and female, both 35, non-smoking, Matt s occupation is Clerical, Erika is a homemaker. Income Protection is for $5000 monthly benefit, 30 day wait, age 65 benefit period, indemnity, increasing claims option. All policies are annually paid, stepped premium, registered in NSW. Correct as at 26 July

5 SMSF Insurance Plan Annual Premium David TCPS (including Rollover discount) Reina $ $ TCP Trauma Flexi $ $ ICP* $ n/a Total $ $ Bill and Veronica Bill and Veronica are cashed up clients whose children have grown up and no longer live at home. They want the best insurance options and don t want to erode their super balance. Bill Veronica CommInsure s SMSF Plan is tailored specifically for the SMSF market, providing a no-hassle solution which aims to align with the SIS Act s conditions of release. The SMSF Plan includes a suite of covers including Life Cover, Accidental Death Cover, TPD Cover (rider, split and standalone) and income protection (standard and accident only options). Further benefits of SMSF Plan are: Eddie SMSF Plan Life Cover SMSF Plan Split TPD (any occ) Split TPD (own occ) (rider) Income Care (standalone) Inside David Reina Combined Plan Plan Aligned to the SIS conditions of release, and gives trustees peace of mind in the event of a claim. Trauma Flexi-linked Super Super Super 39% 61% 62% 38% 49% 51% (standalone) Trauma (standalone) (standalone) Flexible. The structure allows any occupation Total and Permanent Disability (TPD) cover in super and own occupation TPD or Trauma outside super. Annual Eddie SMSF Plan Life Cover $ Premiums are based on $1 million Life and TPD Cover (any occupation) and $250,000 Trauma cover, male and female both 35 (age next birthday), non-smoking professionals, stepped premium. Income protection based on a monthly benefit of $5,000, 30 day waiting period, benefit period to age 65, indemnity, NSW, professional, with Increasing Claim Benefit, stepped premium. Correct as at 26 July *Generally tax deductible. Income Care Range Income Care Plus Permanent Disablement Cover Option Annual Bill Veronica Premium $ $ Potentially cost and tax effective. The SMSF Plan offers Life Care, TPD Cover, Accidental Death Cover, and income protection cover inside super. It also allows TPD Cover to be selected as a rider (to Life Cover) or as a standalone benefit. Eddie s Story Eddie is 35 years old and works as a Marketing Executive. He requires insurance and his adviser recommends the SMSF Plan with Flexi-linking. SMSF Plan TPD Cover $ Split TPD (own occ rider) $ Trauma Flexi-linked $ Income Care (standalone) $ Total $ Super Super 36% 64% 8 0% 100% Male and female both 45 ANB, non-smoking super professionals, sum insured of $1m for life and TPD, and $500k for Trauma. Income protection based on ICP of $5,000 monthly benefit, 30 day waiting period, benefit period to age 65, indemnity, NSW, ICO, stepped. Correct as at 26 July On average, standalone premiums for TPD and Trauma are approximately 25 per cent more than rider premiums. Premiums based on $1 million Life/Split TPD cover, $350k Trauma Flexi-Linked, age 35, male, non-smoker, Professional occupation rating. Income Protection is for $5000 monthly benefit, 30 day wait, age 65 benefit period, indemnity, increasing claims option. All policies are annually paid, stepped premium, registered in NSW. Correct as at 26 July

6 Not all insurance in super is the same. Helping you, help your clients. Remember, while a large number of Australians hold insurance through their group super, they may only have default sum insured levels which is often not enough to fully meet their needs. Insurance through super plans may also be tied into employment arrangements, which means that if your client ceases or changes employment, they could be at risk of losing their insurance cover. Similarly, if they consolidate their super under a different super plan, they also run the risk of not being covered under their new super plan or having reduced cover. Holding retail insurance inside super can complement your client s existing insurance arrangement in a number of ways: As a top-up strategy where existing sum insured levels under the current superannuation fund are not enough to meet client needs. For clients with an existing group salary continuance arrangement policy two-year benefit period, CommInsure s income protection cover can be purchased with a two year waiting period and to age 65 benefit period. If the client s group salary continuance cover ceases, CommInsure s income protection has an in-built upgrade facility for the client to switch their waiting period from two years to three months without further underwriting (subject to terms and conditions). CommInsure offers a solid approach to personal risk insurance, backed by a strong history as one of Australia s largest life risk insurers and our roots in the Australian insurance industry dating back over 140 years. We support your business Dedicated Business Development Manager and local Underwriter. Amplify your knowledge with the Underwriting and Claims Academy. Superior technical expertise with InsuranceTech. Access to a wide range of customisable marketing material through Smart Adviser Marketing. Invaluable sales training for all industry tenure levels, with Risk Skills Academy. We reward your clients loyalty Your clients receive an extra 5 per cent cover at no extra cost (for any Life Care or TPD benefit which becomes payable) if they keep their cover for five years. So a $500,000 payment would become $525,000. Your clients receive $50,000 of accidental death cover at no cost if they keep their Income Care Super cover for three years increasing by another $10,000 every year. Renewal Reward of 15 per cent for when they renew their policy each year using the Super Payment Method. Should your client ever lose their insurance under their super or employer plan; the retail insurance remains in place until such time the client decides to cancel, convert the policy to Plan (before age 75) or the cover simply expires (e.g. age 80 for Life Cover under ). We pay claims Our claims philosophy is simple: we pay all genuine claims promptly and efficiently. In 2014 we paid out more than $879* million in life and disability insurance claims, which translates to more than $16 million every week! In addition, retail insurance in super is also guaranteed to be renewable; meaning the terms and conditions of the cover when purchased cannot be altered by the insurance provider to the point where the client s cover is less than what they were covered for before the change. Insurance purchased through super schemes or corporate plans are usually not guaranteed renewable, which means that they can be changed and may end up providing the client with inferior cover for their needs. 10 *Direct, Group and Retail claims combined for calendar year

7 am - 8 pm (Sydney time) Monday to Friday adviser.comminsure.com.au CIL Important information This document has been prepared by CommInsure, a registered business name of The Colonial Mutual Life Assurance Society Limited ABN AFSL (CMLA). It is for adviser use only and is not to be distributed in full or in part to members of the public. The information is of a general nature only and is based on present taxation laws, superannuation laws, social security laws, rulings and their interpretation as at the issue date of this brochure. The examples used are for illustrative purposes only. is a component of CommInsure Protection. Taxation considerations are general and based on present taxation laws and may be subject to change. You should seek independent, professional tax advice before making any decision based on this information. CMLA is also not a registered tax (financial) adviser under the Tax Agent Services Act 2009 and you should seek tax advice from a registered tax agent or a registered tax (financial) adviser if you intend to rely on this information to satisfy the liabilities or obligations or claim entitlements that arise, or could arise, under a taxation law. The CommInsure Protection Product Disclosure Statement (PDS) is issued by CMLA and The Colonial Mutual Superannuation Pty Ltd ABN AFSL ( the Trustee ), the Trustee of the Colonial Super Retirement Fund ABN ( the Fund ). CMLA is responsible for the administration of the Fund and provides insurance benefits to the Fund as insurer. CMLA and the Trustee are both wholly owned but non-guaranteed subsidiaries of the Commonwealth Bank of Australia ABN AFSL