Wealth Protection Be prepared

Transcription

1 Wealth Protection Be prepared Financial peace of mind should the unexpected happen

2 About Markiewicz & Co. Markiewicz & Co. is one of Australia s leading full service investment management and financial advisory firms. Our experienced advisers specialise in developing tailored wealth management solutions and individual investment strategies that are focussed on achieving each client s financial objectives. How to use this book This book outlines the major categories of personal risk insurance products that can help protect you and your family s financial future from the economic impacts of unexpected injury or illness, as well as death. Depending on your personal circumstances, life stage and financial situation, Markiewicz & Co. may recommend that you consider integrating one or more of these products into your wealth management strategy. For further information about the appropriateness of any of these products, please talk to your Markiewicz & Co. adviser who will also provide you with the Product Disclosure Statements (PDS) relevant to each policy. To find out more, simply call us on +61 (2) or visit The information in this book has been prepared without taking account of your objectives, financial situation or needs. Before acting on this information, consider its appropriateness, having regard to your objectives, financial situation and needs. If the information relates to the acquisition, or possible acquisition, of a particular financial product, you should obtain a Product Disclosure Statement relating to the product and consider the Statement before making any decision about whether to acquire the product. Markiewicz & Co. 2012

3 Contents 03 Protecting your family, assets, income and lifestyle 04 Personal risk snapshot 05 Finding the right personal risk insurance solution 06 Term life insurance 08 Total and permanent disability insurance 09 Income protection insurance 11 Trauma insurance 12 Markiewicz & Co. solutions and services 01

4 02 While most people insure assets such as their car or home, only 31% of Australians insure their greatest asset: their capacity to earn an income.

5 Protecting your family, assets, income and lifestyle If you have dependents, or if your lifestyle and wealth creation strategy relies on your capacity to earn an income, it s important to ensure that you have adequate personal risk insurance cover in place. However, while most people insure assets such as their car or home, only 31% of Australians insure their greatest asset: their capacity to earn an income.* Personal risk insurance provides you with At Markiewicz & Co., we analyse and peace of mind, but more importantly it review each client s situation and then helps minimise the financial impact on assess which combination of personal risk you, your family and your business if an insurance is most suited to their needs illness, injury or other event prevents you and what level of cover is required to from working. Even if you have substantial provide sufficient protection. We are not savings, or income-earning investments, insurance sellers our primary focus is the many costs arising from an extended on wealth management and investment. period of illness or disability can quickly As a result, we are able to act objectively erode years of hard work and savings. and consider a multitude of products from leading insurers to ensure you receive the protection you need and achieve the optimal balance between its cost and the benefit it provides. Even if you have substantial savings, or income-earning investments, the many costs arising from an extended period of illness or disability can quickly erode years of hard work and savings. * Investment and Financial Services Association 03

6 Our experienced advisers develop individual personal risk insurance solutions that are based on your personal and family circumstances, your life stage, your financial situation and your wealth management strategy. Personal risk snapshot Only 4% of Australians have adequate life insurance. In 2005, the level of underinsurance was estimated at $1.37 trillion. Rice Walker Actuaries research for Investments and Financial Services Association 6 in 10 Australians with dependent children do not have enough life insurance cover to meet the needs of their loved ones for more than one year if they were to die. Investigating the Issue of Underinsurance in Australia - Key Facts from TNS Research In Australia, the chance of becoming disabled for more than three months during your working life is 1 in 3. Australian Institute of Actuaries The probability of suffering a disability from the age of 35 to 65 that causes a loss of six months of work more is 1 in 6 for men and 1 in 4 for women. Australian Institute of Actuaries More than half of all serious accidents happen outside of work, where workers compensation entitlements generally don t apply. Australian Bureau of Statistics National Health Survey It is expected that 1 in 3 men and 1 in 4 women will be diagnosed with cancer before age 75. Australian Institute of Health and Welfare & Australian Society of Cancer Registries For a 40 year old, the risk of coronary heart disease at some time in the future is 1 in 2 for men and 1 in 3 for women. Australian Institute of Health and Welfare Nearly 1 in 3 Australians are forced into retirement due to ill health or injury. Australian Bureau of Statistics Australian Social Trends 04

7 Finding the right personal risk insurance solution Personal risk insurance encompasses a variety of products. The four main policy types are term life insurance, total and permanent disability insurance, income protection insurance and trauma insurance. Within these broad categories, there are also special products that are designed to meet the needs of people who are self-employed or to reduce the financial impact to a business through the loss of a key employee, executive or partner. At Markiewicz & Co. our experienced advisers develop individual personal risk insurance solutions that are based on your personal and family circumstances, your life stage, your financial situation and your wealth management strategy. We assess the risks you face and determine the amount of cover and policy combination required to help minimise any future financial loss as a result of illness, injury or death. We can also advise you on the most tax-effective ways of structuring your personal risk insurance. For example, while the premiums for a life insurance policy purchased through your own Self-Managed Super Fund create a tax deduction for the fund, the benefit payment may be taxable, (depending on who is the beneficiary). Conversely, although the premiums for a policy held outside of super are generally not tax deductible, the benefit payment is tax-free. Just as importantly, we will review your policies regularly to ensure they continue to best meet your needs. In the event of a claim, we can help you complete the required formalities or assist you with other aspects of the claims process. 05

8 Term life insurance Term life insurance provides a lump sum payment to your beneficiaries if you die. In some cases, if you are diagnosed with a terminal illness, the payment will be made if you have less than 12 months to live. While the unexpected loss of a loved one is an extremely traumatic event, adequate life insurance cover can ensure that those depending on your financial support will have the best opportunity to get on with life and maintain their financial security. While life cover is often regarded as only appropriate for the main income earner, it is just as appropriate for a person who takes care of the family and the home. The amount of life insurance cover you require depends on a number of factors such as your income, number of dependents, everyday living expenses and the value of any loans or debts you may have. You should also consider other costs that your family may need to meet, and how best to ensure their future financial security. This may include: Medical and funeral expenses Mortgage and credit card repayments Educational needs of children or grandchildren Costs for a housekeeper or home help Funds to establish an income-earning investment portfolio Case Study Providing for the future needs of your loved ones Alistair was the chief financial officer of a large mining company. At age 35, when his wife Rebecca gave up work to raise their young family, he decided to take out life insurance. Five years later, when driving home from a Sunday morning of golf, Alistair was fatally injured in a motor vehicle accident. While Rebecca and the children were devastated by this tragic loss, Alistair s foresight and planning ensured that they weren t also thrown into a financial crisis or left with ongoing money worries. The lump sum payment from the life insurance policy enabled Rebecca to settle all the immediate bills including outstanding credit card balances and funeral costs. After paying off both mortgages she set up a fund for the children s education and invested in a wealth creation portfolio to create an ongoing income stream. While no amount of money can ever replace the husband and father they lost, Rebecca and the children have been able to get on with their lives and pursue their hopes and dreams, the way Alistair would have wanted them to do. One of his key motivators was that the couple s finances were heavily geared, including a mortgage on their family home as well as an investment property. They also had high aspirations for their two children, and were planning to send them to a private school for their secondary education. 06

9 The amount of life insurance cover you require depends on a number of factors such as your income, number of dependents, everyday living expenses and the value of any loans or debts you may have. 07

10 Total and permanent disability insurance No matter how cautious, fit or healthy you are, no one is impervious to the random nature of accidents and illnesses. However you can take measures to minimise the impact of unexpected events that put your financial future at risk. Case Study Your life could change in an instant Total and permanent disability (TPD) insurance provides you with a lump sum payment if you are permanently or seriously disabled as the result of an illness or injury. Suffering such a disablement could change your life forever. It would affect your ability to complete everyday tasks and possibly prevent you from working and earning an income. If you have dependents, and are their sole or primary provider, such an event would also impact on their quality of life and future financial security. The lump sum benefit you receive from TPD cover can assist you with medical and rehabilitation costs as well as provide greater financial security for you and your family. The lump sum benefit you receive from TPD cover can assist you with medical and rehabilitation costs as well as provide greater financial security for you and your family. Your cover should be sufficient to enable you to live comfortably and meet costs such as: Gap and other out-of-pocket medical expenses not covered by your health insurance Modifications to your home or car to accommodate your disability and make life easier Costs for a carer, housekeeper or home help Payment of your mortgage, credit card and other debts. TPD Insurance can also be combined with other products such as term life insurance. Kathy, a fit and healthy partner in a rapidly growing law firm, was dining with clients and colleagues to celebrate a recent legal win. Late in the evening she complained of a stabbing headache and a feeling of dizziness. A short while later she collapsed. She was rushed to the emergency department of a major hospital, where she was diagnosed with a cerebral haemorrhage. Despite the rapid treatment, there had been sufficient bleeding to result in permanent damage to the brain and consequent impairment of certain cognitive processes. Sadly, this meant that Kathy s ability to work effectively in the law firm was severely reduced. Part of the lump sum payment from Kathy s TPD policy was used to access the best medical treatments and rehabilitation. It also enabled her to pay off her mortgage and have modifications made to her home, allowing her to live as comfortably as possible. She has invested the balance to provide an ongoing income, which enables her to look forward to a life without financial stress. 08

11 Income protection insurance For most people, the capacity to earn an income is vital to maintaining their present lifestyle; providing support to dependents; and creating wealth and a financially secure future. Income protection insurance helps minimise the impact of not being able to work due to illness or injury. Unlike term life insurance or total and permanent disability insurance, it does not pay you a lump sum, but is designed to replace a portion of your income (usually up to 75%) through monthly payments for a specified period. At a time when you may have other out-of-pocket expenses to meet, income protection insurance helps protect your lifestyle, assets and independence, as well as avoid the financial stress of drawing down your savings or taking on more debt. Most policies include a waiting period, while some enable you to include rehabilitation options and other ancillary benefits that will provide further financial relief. Premiums for income protection insurance are tax deductible. Case Study Protecting your ability to earn an income Lionel is a senior executive with an IT consultancy and an active member of a road cycling club. One weekend when he was competing, he and three other riders were involved in an accident with a semi-trailer. Lionel suffered serious injuries to his spine as well as several fractures. He required extensive surgery followed by a program of intensive rehabilitation, and was unable to work for four months. Fortunately, after a 14-day waiting period Lionel s income protection insurance policy commenced paying him a monthly benefit equivalent to 75% of his usual salary. In addition, his policy provided additional funds that helped defray the cost of his rehabilitation. Although the accident has cut short Lionel s competitive cycling days, he is thankful that he did not also suffer the financial pain that would have resulted from a loss of income and costly medical treatments. Income protection insurance helps protect your lifestyle, assets and independence, as well as avoid the financial stress of drawing down your savings. 09

12 10 When taking into account the costs of medical procedures, medicines and rehabilitation, together with time lost from work, the cost of survival can be financially crippling.

13 Trauma insurance Recent advances in medical science have resulted in more people today surviving the diagnosis of a major health problem than would have been the case in the past. However, when taking into account the costs of medical procedures, medicines and rehabilitation, together with time lost from work, the cost of survival can be financially crippling. As a result, many insurers have developed trauma insurance policies that pay you a lump sum if you are diagnosed with a specific non-pre-existing illness, injury or condition. These types of policies usually cover conditions such as heart attack, stroke, cancer and paraplegia. With the diagnosis of a major medical condition being an extremely stressful event in itself, trauma insurance can help prevent financial worries further compounding the stress for you and your family. While income protection will help ensure you receive a regular payment when unable to work due to illness or injury, it may not provide additional funds to pay for the costs of treatment. Trauma insurance is often combined with other personal risk insurance policies to provide a more comprehensive level of cover. For example, while income protection will help ensure you receive a regular payment when unable to work due to illness or injury, it may not provide additional funds to pay for the costs of treatment. Case Study Saving your life, as well as your life savings Kathy is a highly regarded architect who had left a large architectural firm in order to gain a better work-life balance by working for herself. She understood the importance of maintaining her income and had taken out income protection insurance within the first year of establishing her practice. However when her best friend Georgia, a single mother, was diagnosed with breast cancer, she decided to also take out trauma insurance cover. Luckily, Kathy has remained healthy and her practice is busy. Yet having witnessed first hand the financial devastation Georgia suffered during the three years that she valiantly battled her disease, which included undertaking expensive treatments at a specialist oncology clinic in Germany, Kathy has decided that her policy is an important investment in herself and her business. While she hopes she never needs to claim, she has the peace-of-mind that should the unexpected happen, the two policies will provide her with the resources required to seek the best treatments, as well ensure that she continues to receive an income. 11

14 Markiewicz & Co. solutions and services Wealth management The increasingly complex and constantly changing nature of legal and tax systems around the world requires wealth management strategies to be continually monitored and optimised. At Markiewicz & Co, understanding the global economic environment is a key component of our wealth management advice, which also takes into consideration your current life situation and future needs. Our wealth management services include: Wealth overview and financial planning Tax planning Retirement planning Estate and succession planning Planning for a change of residence Structures for wealth management Wealth preservation and protection Philanthropy Investment services The Markiewicz & Co. Investment Advisory service enables clients to support their own investment decision-making with either a full-service Investment Advisory Mandate or a Tailored Investment Mandate. Both these mandates provide access to proactive and comprehensive investment advice, support and guidance. If you prefer to delegate your investment decision making, we also offer a Discretionary Mandate service whereby we monitor your holdings and make the investment decisions on your behalf, based on a jointly defined investment strategy. Markiewicz & Co. investment products include: equities, options, futures, foreign exchange, fixed interest, investment funds, structured products, and margin lending. Portfolio administration The Markiewicz & Co. Portfolio Administration Service (PAS) is a comprehensive wealth management service available only to private clients that provides portfolio administration and reporting across a wide range of asset classes. The service incorporates investment advice, trade execution and access to research, helping you make more informed investment decisions. While you appoint us to administer your investment portfolio, you retain all decision-making authority. Research With our forward thinking, next trend approach to the global economy and investment environment, Markiewicz & Co. conducts ongoing research to identify emerging trends and assess their future impacts. Our analysts develop region- and sector-specific strategies based on our unique and insightful investment viewpoint. Where required, we supplement our extensive internal research resources with the insights and findings of leading external research providers. Importantly, as an independent Australian-owned investment management firm, Markiewicz & Co is not influenced by institutional ownership. Corporate The Markiewicz & Co corporate team offers access to deep expertise in developing specialised investment opportunities across all asset classes and industry sectors, and assists clients with IPOs and capital raisings. Eligible clients who qualify as Experienced or Sophisticated investors may be invited to take part in high-level investor programs, as well as offered access to an even wider range of investment options. 12

15 Finding out more about Markiewicz & Co. To find out more about the range of Wealth Management and Investment services offered by Markiewicz & Co, please call us on or visit our website,

16 Markiewicz & Company Pty Ltd ABN AFS license No Head office Level 6, Macquarie Street Sydney NSW 2000 Telephone +61 (2) Facsimile +61 (2) Markiewicz & Company GPO Box 2237 Sydney NSW 2001