Get covered for life. Why you need life insurance

Transcription

1 Get covered for life Why you need life insurance

2 2 Suncorp

3 Life can be full of surprises unfortunately not all of them pleasant. Knowing how to protect yourself and your loved ones in the case of uncertainty can be difficult. We know it s important to protect your home and car. And most of us do. But it s also important to protect your life, your ability to earn an income, your health and your business interests. Because while we don t like to think about it, the reality is traumatic and tragic events don t only happen to other people, they can happen to us. Working with a financial adviser can give you a better understanding of life insurance and how much you need to keep you and your family s lifestyle, dreams and future financially secure. To help you get started, we ve put together a simple guide to explain the different types of life insurance. We also share some real life stories to show how having the right cover in place can protect you and the people you love. DID YOU KNOW? 83% of people insure their cars and only 31% insure their income. 1 1 Lifewise, Get covered for life 3

4 It won t happen to me It s easy to dismiss illness and injury by saying it won t happen to me. But the reality is millions of Australians are impacted by serious illness or injury. What if it did happen to you? One in two men and one in three women will be diagnosed with cancer at some stage in their life by the age of 85 2 An Australian dies every 12 minutes from cardiovascular disease 3 30% of Australian deaths (43,946) recorded cardiovascular disease as the underlying cause of death in In 2014 over 1,100 people were killed in motor vehicle accidents in Australia 5 More than 700 people were killed in accidental falls in In Australia, prostate cancer is the most commonly diagnosed cancer in men and more men die of prostate cancer than women die of breast cancer. 7 2 Australian Institute of Health and Welfare & Australasian Association of Cancer Registries Heart Foundation, 4 Australian Institute of Health and Welfare, Cardiovascular Disease Australian facts Australian Government Department of Infrastructure and Transport December Leading Causes of death. 7 Prostate Cancer Foundation of Australia. 4 Suncorp

5 Life insurance at a glance There are five main types of insurance cover. Some pay a lump sum, and others pay an ongoing monthly amount. Type of cover Life Cover Total and permanent disability (TPD) Trauma Income Protection Business Expenses What does it do? Also called life insurance or term life. Pays your beneficiaries a lump sum when you die or become terminally ill. Pays a lump sum if you become totally and permanently disabled. Pays a lump sum if you are diagnosed with either a serious illness such as cancer, heart attack or stroke, or undergo major surgery such as a coronary artery bypass. Child Cover may also be available, which pays a lump sum if your child suffers a serious medical condition. Provides an ongoing monthly payment of up to 75% of your pre-tax income if you are unable to work due to illness or injury. Reimburses business owners on a monthly basis to cover fixed business costs (such as rent, staff wages and electricity) if you are temporarily unable to work due to illness or injury. Read on to explore the different types of life insurance in more detail. Get covered for life 5

6 Life Cover because life s for living Life Cover is also commonly known as term life or life insurance. Life insurance provides a lump sum on your death or on the diagnosis of terminal illness. Life Cover provides financial support when it s needed most, giving your loved ones financial security and freedom to make choices about their future. The right amount of Life Cover differs from person to person. Your adviser can help you calculate an appropriate sum insured for your circumstances which reflects your debts and the ongoing income requirements of your dependants. Some life insurance companies offer added benefits and features. When you do your research and talk to your adviser, look out for extras such as: funeral advancement benefit this pays an advanced portion of the sum insured to cover funeral costs. grief support services confidential grief counselling at an independent counselling organisation. Karen s story Karen, a 38-year-old single parent, worked as an office manager. Aware of her financial vulnerability, with a mortgage and sole care of her 14 year old son Steven, Karen consulted a financial adviser and decided to take out a life cover and trauma policy for $500,000. Eighteen months later, Karen lost consciousness and was rushed to hospital. She had suffered a brain haemorrhage, and died that evening without regaining consciousness. Under her life policy, Karen had nominated Steven as her sole beneficiary. Her son did well at school, and Karen wanted to make sure he could afford to go on to university, if he wanted to. He received the $500,000 through a trust fund set up by the fund s solicitors. Steven is now working hard for his HSC, with plans to become a doctor. Based on a real claim. Names have been changed. This is an example only. Grounds for making a claim and level of benefit can vary from one policy to another depending on their terms. Child Cover insurance cover for the whole family Child Cover insurance or Children s Trauma provides you with a lump sum payment should your child die, be diagnosed with a terminal illness or suffer one of a list of specified medical conditions or procedures. The benefit is paid on diagnosis or occurrence of the illness or injury. Child Cover is designed to ease the financial pressure on families. Benefits are often spent on medical treatment, rehabilitation, replacing income if a parent takes time off work, or to take the family on holiday, during what is often a very stressful time. Child Cover is generally offered as part of lump sum or Income Protection cover. Some insurers offer the first $10,000 of cover premium-free for each child, making it a simple and affordable way to top up your family s cover. Differences between policies As with adult Trauma insurance, each insurance company maintains their own list of illnesses and injuries, and it s worth checking with a financial adviser what each policy covers. Medical definitions also vary between insurance companies, so do your research and talk to your financial adviser before deciding on a policy. Look for a policy that has a continuation option this means that after your child turns a particular age, the policy can be converted to an adult version. 6 Suncorp

7 Total and Permanent Disability insurance protecting what matters most Total and Permanent Disability (TPD) insurance provides a lump sum if you suffer an illness or injury that leaves you totally and permanently disabled. TPD insurance benefits are often used to eliminate debts, pay for medical expenses or fund any permanent lifestyle changes resulting from disablement. TPD definitions may vary depending on the particular product and insurance policy. It s important to do your research and speak to a financial adviser so you can consider, among other things, what definition may be most appropriate for you given your personal circumstances. Some policies can provide for two or more TPD definitions including those listed below. Depending on your circumstances a policy that allows you to claim under any one of these (or similar) definitions may be more beneficial to you. 1. Unlikely to ever work in your own or any occupation again. 2. Permanently unable to perform two of a number of specific Activities of Daily Living without someone else s physical help. 3. Loss of sight or use of limbs. 4. Suffer significant cognitive impairment (dementia-type illnesses). 5. Suffer from one of a list of serious medical conditions e.g. cardiomyopathy. What is the difference between an own or any occupation definition? Most companies allow you to choose whether you want coverage against being unlikely to be able to work in your 'own' occupation or in 'any' other occupation again, after suffering an illness or injury. For example, a surgeon who injures her hands in a car accident may not be eligible for benefits under an 'any' occupation definition, as she is still qualified (and able) to work as a general practitioner. However, if the surgeon has an 'own' occupation policy, she may be eligible to claim, as she is unlikely to ever work as a surgeon again. 'Own' occupation TPD provides a greater level of coverage. Your financial adviser will be able to help you choose the best definition for your personal circumstances. Get covered for life 7

8 Trauma insurance helping you through serious illness Trauma insurance provides you with a lump sum on the diagnosis (or occurrence) of one of a list of specified serious medical conditions and procedures. Each insurance company maintains their own list, but they generally include serious medical conditions such as cancer, heart attack or stroke. Trauma insurance is designed to provide you with money when you need it most. You can generally use the money how you choose, for example to cover medical costs and treatment, or to reduce debt. Some people choose to make a permanent lifestyle change, such as reducing their working hours, so they can spend more time with family. Differences between policies Medical definitions vary between insurance companies, so make sure you do your research and seek assistance from your adviser when choosing a policy. What one company defines as a heart attack may not be considered a heart attack enough by another. Some companies also offer partial payments, depending on the level of severity of your condition. Most policies will cover you for an extensive list of illnesses and injuries. Check with your adviser about what you are covered for under your policy. Darren s story Darren, 34, is an electrician who works mostly on major high-rise construction projects. Several years ago, while still single with no children or major financial commitments, he spoke to a financial adviser and decided to take out income protection and trauma cover of $200,000. One Sunday, playing at local cricket match, Darren suffered a minor stroke. In his trauma policy, stroke was one of the stipulated medical conditions, so Darren made a claim and received the full payment of $200,000. Darren and his partner paid off part of their home loan. Darren also claimed on his crisis benefit under his income protection policy while he was off work. This helped cover everyday expenses such as their home loan and other bills. Darren was able to return to work after four months, and resumed playing cricket soon after. Based on a real claim. Names have been changed. This is an example only. Grounds for making a claim and level of benefit can vary from one policy to another depending on their terms. 8 Suncorp

9 Income Protection insurance safeguarding your income when you need it most Income Protection pays a monthly amount while you are unable to produce an income as a result of illness or injury. Many policies will cover up to 75% of your salary if you re totally or partially disabled. By replacing your regular income, Income Protection payments can help you and your family maintain a level of financial normality. Income Protection gives you the financial freedom to focus on your recovery or treatment, without worrying about regular expenses. Income Protection policies are very flexible and can be tailored to suit your individual and family circumstances. Included and optional extras Most Income Protection policies include certain benefits at no extra charge, and optional benefits for an additional cost. If you own your own business, ask your adviser about benefits such as business rehabilitation benefits where your insurer will reimburse business coaching or consulting fees to help you return to a successful business. Some insurers also reimburse some or all additional child care costs you may incur if you become totally disabled. Be sure to talk to your adviser about the potential included and additional benefits available to you. Dan s story Dan is a 38 year old married father of two who runs a successful carpentry business. As a self-employed, sole income earner for his family, Dan and his wife had spoken to their financial adviser after the birth of their children and taken out income protection cover. Recently Dan suffered a stroke which left him unable to work for a period of time and needing extensive rehabilitation. Through Dan s income protection cover, he was able to access a team of rehabilitation specialists. Dan s claim ensured that he was able to take the recovery time he needed, with no adverse effect on his family or his business. Dan is now back on his feet and training for a 1000km run to raise funds and inspire other stroke survivors. Based on a real claim. Names have been changed. This is an example only. Grounds for making a claim and level of benefit can vary from one policy to another depending on their terms. Get covered for life 9

10 Business Expenses insurance keeping your business running Business Expenses insurance pays a monthly benefit to cover fixed business costs if you suffer an illness or injury and are unable to work. It works on a similar principle to income protection, as it pays a monthly benefit. However, its purpose is significantly different. Business Expenses insurance is designed to cover the fixed day-to-day costs (up to the monthly benefit) of running your business in your absence, such as the cost of a locum, rent, staff salaries, equipment expenses, loans and other business overheads like electricity and cleaning bills. Business Expenses cover helps you cover your fixed business expenses when you can t work so you can focus on getting healthy again. But I already have Business Interruption insurance Business Interruption insurance is different from Business Expenses insurance. Business Interruption insurance is not related to your health or ability to work, but pays you a monthly amount to cover the cost of fixed business expenses if a trigger event occurs. Trigger events for Business Interruption insurance include things like fire or water damage. 10 Suncorp

11 Myth busters There are many misconceptions about insurance. Some people still regard it with suspicion, while others, believing they already have the protection they need, see it as an expensive, non-essential nice to have. The reality can come as a shock. The following myth busters help dispel some of the more common misconceptions about insurance, and shed some light on who needs it and why it s so important. Myth 1 You re young and healthy. You don t need insurance. No matter your age or state of health, the risk of serious or fatal illness or injury is more common than you think. Recent research identified the top five causes of accidental death in Australia and found that Generation Y (aged 18-31), and more men than women, are more likely to suffer a fatal accident. The study identified the main causes of fatal accidents in Australia as: 1. Road and transport accidents (including land, sea and air transport) 2. Falls 3. Poisoning or choking 4. Drowning 5. Natural disasters and other external forces (including deadly accidents in and around the home, including fires, electrocution, accidents caused by electrical appliances or household equipment, fatal venomous insect bites or animal bites). 8 The study showed that poisoning and choking were more prevalent amongst Generation X (aged 32 to 44) men. Road and transport-related deaths and accidental drowning were the highest amongst Generation Y (aged 18-31), compared to all other generations. Unfortunately, there s always the possibility you could suffer a serious injury or illness you can t recover from. And this could seriously hinder your earning capacity. Talk to your adviser about insurers that offer discounts to young, healthy people. Myth 2 Insurance is too expensive. It s a common misconception that insurance is expensive. In fact, it s not having insurance that could cost you and your family everything. Most people are surprised to learn that life insurance is cheaper than they think. It s too expensive not to have insurance! The average lifetime out of pocket expense for a cancer patient is $47,200 including $38,300 in lost income, $3,900 in non-health care costs, and $5,000 in health care. 9 The cost for bowel cancer treatment alone can reach as high as $66, The cost of a wheelchair can be more than $3,000. Additional costs of child care, electricity, laundry and taxis quickly add up. A funeral can cost anywhere from $7, Serious illness or injury can affect anyone, at any time. And can be extremely damaging to your family s longterm financial security. Having the right cover in place can help you deal with unforeseen expenses and generally take the financial pressure off. Talk to your adviser about the different options for structuring your insurance to suit your needs. Generally income protection and business expense insurance premiums are tax deductible. Taking out insurance through your super can be easy and tax-effective or you might select waiting periods with lower premiums. 8 Asteron Life research: Data from the Australian Bureau of Statistics from was analysed to give an aggregated view of fatal accidents in Australia. 9 Access Economics, Cost of cancer in NSW, Access Economics for Cancer Council NSW. 10 Cancer Council cancer%20screening.pdf 11 Australian Government, Get covered for life 11

12 Myth 3 You have adequate insurance in your super fund. Many people have limited amounts of life insurance (including some form of life cover) within their superannuation, known as group insurance. Even so, Australians remain severely underinsured. We generally don t have enough insurance to cover our debts if something happened to render us unable to work. Isn t my group insurance cover in my super enough? Group insurance is usually based on your salary and not on how many financial dependants you have, your family circumstances or your level of debt. The minimum level of cover provided via your super fund is set with all members in mind it is therefore unlikely to be exactly the level of cover you and your family need and may not be enough to cover all or even just come of your debts. Not all types of insurance are available from super funds. Funds typically offer members access to Life insurance cover and Total and Permanent Disability insurance. Fewer funds offer their members access to Income Protection insurance and Trauma insurance cannot be purchased through super. Myth 5 Workers compensation will be enough to cover me. If something happens to you at work, workers compensation helps part of the way, but you could be waiting a long time and it only covers some of your expenses. Consider what might happen if something happened to you outside work or you suffer heart disease or cancer. When your income stops, you don t want to worry about your loan repayments, bills and everyday expenses. Life insurance goes to work where workers compensation leaves off. Benefits can include: Access to the rehabilitation you need to return to work If you re self employed and need to keep an eye on your business, or work for someone else and wish to return to work, some policies allow you to work 10 hours a week while still receiving benefits. If you can t afford comprehensive cover, you can cover yourself for accidental injury only. Considering the majority of claims are due to accidents, this can be a sensible option. Myth 4 Private health insurance provides all the cover you need. Private health insurance is a great way to protect you and your family against medical expenses arising from illness or injury. The government provides incentives to Australians who have private health insurance, including tiered tax rebates on premiums and a reduction in the Medicare surcharge levy. However, private health insurance, like insurance within superannuation, can also leave you with protection gaps and should be used as a complementary product to life cover, TPD, trauma and income protection insurance. A good private health insurance policy will cover the immediate expenses of an illness or injury, while life insurance will protect your lifestyle from being disrupted. What is private health insurance? There are two types of private health insurance cover available: hospital cover and ancillary (or extras) cover. The amount of treatment you are covered for depends on a number of factors, including the level of hospital cover you select, the hospital and doctor you choose to treat you, and whether they have an affiliation with your health fund. Will private health insurance cover all my medical expenses and rehabilitation costs? Not necessarily. Private health insurance may not cover the total cost of the doctors services provided to you in hospital, or your out-of-hospital rehabilitation care including the costs of your medication. This can leave you with a gap between the cost of the treatment and the amount covered by your health fund. 12 Suncorp

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14 What next? Seek advice There are dozens of life insurance products on the market, with differing benefits and definitions of what constitutes a payable claim. Deciding which product will provide the best protection for you and your family can be confusing but a financial adviser can help. Your financial adviser can help by assessing your situation and evaluating the best insurance strategy for your needs. Not only can they help you determine how much is enough, but they can also help you: decide on which cover or combination of cover is most suitable for your individual needs structure your policy/policies to best suit your circumstances review your existing cover. Value of advice Advice is about identifying opportunities to protect what you work hard for. Financial advisers can help by offering professional advice and developing tailored strategies at every stage of your life. Whether you re starting your first job, have a family, or are buying your first home. Should you suffer an unexpected illness or injury your world can change dramatically. That s why it s good to be prepared by protecting your income and yourself, and this is where an adviser can help you establish the level of cover you need. With their knowledge and access to a range of products they can tailor a plan for your situation after assessing your individual needs and financial responsibilities. Ask a Suncorp Financial Planner or Suncorp Authorised Representative Suncorp Financial Planners and Suncorp Authorised Representatives have specific industry qualifications and are experienced in helping clients meet their financial goals. They will take the time to listen, explain things clearly and keep you informed. They are committed to understanding your needs and identifying the best ways to achieve your goals. Suncorp is a principal member of the Financial Planning Association (FPA). The FPA is the peak industry body representing the Financial Planning industry in Australia. Our Financial Planners and Authorised Representatives are committed to the FPA s rules of conduct, ethical and professional standards and are required to undertake ongoing industry training every year. This information is current as at 1 July 2015 and may be subject to change. This information is general advice and doesn't take into account a person's objectives, financial situation or needs. A person should consider the appropriateness of the advice and the Product Disclosure Statement (PDS) before making any decision about acquiring or purchasing a financial product. This information is provided by Suncorp Financial Services Pty Ltd (SFS) ABN , Australian Financial Services Licence & Australian Credit Licence , and is current as at 1 July 2015 (may be subject to change). This information is general advice only and doesn t take into account a person s objectives, financial situation or needs. A person should consider the Product Disclosure Statement before making any decision about acquiring or purchasing a financial product and seek independent financial advice. Various products and services are provided by different entities of the Suncorp Group who are not responsible or liable in respect of products or services provided by other entities in the Suncorp Group. A fee may be payable if a financial plan is prepared. 14 Suncorp

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