The Advantages of AFRM Financial Protection

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1 Providing the level of ADVICE and Security you deserve Protecting your tomorrow today Melbourne Sydney Central Coast Newcastle Port Macquarie

2 As a medical practitioner, you require specialised managed protection and safeguards that professionals in other industries do not. Why should I choose AFRM? As with all legal contracts, definitions count. Different contracts will have different claim definitions, and some are markedly better than others. Selecting the best contract for you requires detailed analysis of these definitions, to determine whether or not specific claims are payable. At AFRM, our analysis involves extensive research and takes into account not only which insurer has the better contracts in the market, but also costs, claims and administrative management experience. This is where AFRM can help Over the last two decades, we ve assisted thousands of medical professionals throughout Australia find the right financial solutions for their situation. Taking a holistic view of a client s finances, we tailor a plan that will provide maximum financial security if they lose their ability to earn. And, just like you, we pride ourselves on a reputation of technical and professional excellence with a human touch. Visit our website listen to what your colleagues talk about. While we can t remove the risk of something going wrong, we can provide you and your family with protection, compensation and financial security if it does. Our award winning medical specialist adviser team has demonstrated experience in finding the right contracts for the right clients. In fact, our knowledge in insurance contract definitions and managing claims is so well regarded in the industry that we now provide advice to some of Australia s most well-known companies on how to do it. But our most important role is to give you and your trusted adviser, your accountant, advice on what we perceive are your areas of exposure to risk and offer solutions to meet your needs. Would you like to find out how AFRM can secure financial protection for you and your family? We ve put together the following document to provide indepth information about our services, as well as to provide a check-list of the information we will use to create your own Risk Management Plan and because risks change we ll review your plan annually. Contents Why Choose Afrm? Income Protection Term Life Insurance Total and Permanent Disablement (TPD)Insurance Trauma Insurance

3 Income Protection Income protection safeguards you against the impact of a sudden loss of income caused through illness or injury. We consider the right income protection contract to be the most important component of your broader financial plan. What will I need to determine my level of income protection? Why Protect My Income? In the majority of cases, your most valuable financial asset is your income and your ability to earn that income. Should your ability to earn an income be hindered, the financial impact will be swift and (again, in the majority of cases) severe. Income protection contracts provide a monthly replacement income stream in the event of being unable to work due to illness or injury. Should you be unable to work due to illness or injury at any stage during the rest of your working life, this cover will provide replacement income in lieu of your salary to ensure living costs can be met and your financial goals still achieved. Any monthly benefits will be paid for the term of the contract (age 65 or to age 70) that you nominated under application, and in most cases cannot be cancelled. Insurance premiums are also tax deductible. However when on claim, the benefit payment received will form part of your assessable income in the year paid. AFRM can assist determining your insurable income. Insurable income is different from accounting definitions of income such as taxable income, gross income, net profit etc... and represents all income that can be regarded as having been generated from your f Your previous two tax returns f Your superannuation contribution details f If recently employed your employment contract f If self employed previous 2 tax returns and also 2 most recent financial accounts of all your business entities personal exertion. It can be a complex calculation but one that is important to get right given the maximum allowable income protection benefit is normally 75 per cent of insurable income, therefore you will want advice on how to maximise this benefit in the event you do make a claim. Want to find out more?

4 Term Life Insurance Death Cover, Total and Permanent Disablement Insurance, Trauma Insurance Term life insurances pertain to death cover, total and permanent disability (TPD) cover and trauma cover. Term life insurance and its components provide a supplement to your Income Protection, and are an important part of any Risk Management Plan. What will I need to determine my level of death cover? This section will explain these three policies and how they will provide support for you and your family in the event of a sudden change of circumstance. f List of Assets & Liabilities (will investment assets be sold or retained) f Number of family members (any special needs) f Required income stream to surviving family (net or gross) f Does spouse work, income received f What education funding is required f Is there need for capital for childcare/housekeeper Death cover Death cover protects your family financially by paying a lump sum of money to a nominated beneficiary if you die. Why do I need death cover? Calculate the amount of money you expect to earn between now and your retirement, and the support that this would allow for your family and loved ones. If you were to die tomorrow, they would no longer have this support. You can protect your family against this happening. Death cover provides a precalculated, one-off payment that will: Remove personal debt We believe it essential that the burden of debt be removed from your loved ones, securing personal assets and ensuring decisions are not influenced by the ongoing needs to service debts. Provide a future income stream If your loved ones are left with your assets (house, personal assets etc) debt free, you can determine what level of income they will require to live on in the event of your passing. Cater for childcare, housekeeping and education expenses If you have children or dependents still living at home and requiring care, death cover will provide extra financial resources to meet their educational and living needs. To calculate the most appropriate amount for your death cover payment, it is important that any beneficiaries you wish to provide for be listed in your Will, or be listed as a nominated beneficiary (binding nomination) in your superannuation fund details. Contact your nearest AFRM office (see back cover) or send a request for a specialist medical team adviser to contact you at

5 TPD Insurance Total and Permanent Disablement INSURANCE Total and permanent disablement (TPD) insurance provides a lump sum payment if you suffer a disability before retirement and can not work in your usual occupation or chosen field of employment. Why do I need TPD cover? More often than not, TPD is caused by events such as muscular skeletal (chronic back pain or loss of limb) and psychological conditions (depressive stress-related illnesses) although unforeseen accidents, injuries and severe medical conditions are also covered by policies. Should you suffer TPD, there is the potential for significant unforeseen costs such as loss of income, financial difficulties (existing debts), medical expenses and rehabilitation costs that will have a real impact on you and your family s financial situation. Will your current savings or any passive income, be sufficient to service your debt, provide for living expenses, maintain your family s present lifestyle and service any unforeseen expenses? By nominating a TPD lump sum payment, you can guarantee the removal of debt and sufficient money to provide a passive income stream to help you meet any such current and future needs. Different insurance policies will have different definitions of what constitutes a total and permanent disability. The main discrepancy will be whether or What will I need to determine my level of TPD Cover? f List of Assets & Liabilities (will investment assets be sold or retained) f Required income stream to live on (you and family-net or gross) f Does spouse work, income received f Is there a need for capital to provide education funding f Is there need for capital for childcare/housekeeper not your TPD policy covers you against or similar). This is classified as an any being unable to work again in your occupation TPD event. own occupation, or being able to work again in any occupation suited If you have an own occupation TPD by education, training and experience. definition in your policy and your illness or injury stops you from working in your own If you have an any occupation TPD occupation a lump sum payment will be definition in your policy (required under made. This is AFRM s preferred option. Superannuation legislation), Insurers after receiving 2 independent medical It is important that own occupation reports, may decide that your injury TPD cover should not be placed under or illness, while preventing you from superannuation as this definition may working in your own occupation, not meet the legal conditions permitting does not prevent you from working the Trustees to release funds to an in another similar occupation (i.e. a individual member under superannuation serious back injury may stop a surgeon legislation. Therefore, benefits could be from performing their specific role, but trapped in your super fund and would be not from practicing as a medico legal unable to be used for debt reduction or counsel or a tutor/lecturer at a University other immediate funding needs. Want to find out more?

6 Trauma Insurance A trauma or a critical illness contract provides a lump sum benefit in the event that you suffer one of approximately 40 medical conditions. These conditions vary with the insurance company but generally include events such as myocardial infarction, cancer, stroke and cardiac procedures. Others conditions covered include but are not restricted to; Alzheimer s disease, Aplastic Anaemia. Benign Brain Tumour, Cardiomyopathy, Chronic Liver Failure, Chronic Lung Failure, Coma, Dementia, Encephalitis, Loss Of Independent Existence, Loss Of Speech, Major Abdominal Aortic Surgery, Major Head Trauma, Major Organ Transplant, Motor Neurone Disease, Multiple Sclerosis, Muscular Dystrophy, Occupationally Acquired HIV, Paralysis (Diplegia, Hemiplegia, Paraplegia, Quadriplegia and Tetraplegia), Parkinson s Disease, Primary Pulmonary Hypertension, Severe Burns, Total Deafness and Total Blindness. Trauma insurance is more costly than death and TPD insurance for the simple fact that there is a significantly higher chance that a trauma claim will eventuate in the life of your Risk Management Plan. Why do I need trauma insurance? Advances in medical treatment have increased the need for trauma insurance. While you now have more chance of surviving life threatening illness and accidents, you are also more likely to have substantial difficulties in managing your financial affairs with potentially little or no income, debts to pay and an altered lifestyle that potentially leaves you dependent on others. By having a lump sum of capital paid to you in such an event, you can fund the debt and provide for an extended period away from work and ensure that cost is no constraint in getting the best available care or treatment. As with death and TPD insurance, we advise that any trauma payment should include enough capital to remove personal debt, provide for unforeseen expenses, and to provide supplementary passive income to your income protection benefit. The maximum level of Trauma cover currently available is $2 million and premiums are not tax deductible. What will I need to determine my level of trauma insurance? f List of Assets & Liabilities (will investment assets be sold or retained) f Required income stream to live on (you and family-net or gross) f Does spouse work, income received f Is there a need for capital to provide education funding f Is there need for capital for childcare/housekeeper Child Trauma Cover It goes without saying that a child suffering from a life-threatening illness or injury is every parent s worst nightmare. In this instance, it is only natural for all energies to be directed to the child s wellbeing, with all other considerations put on hold including work. Where available, children s trauma policies are provided as an option under an adult death, income protection or trauma contract. If you elect for this extra option, you can nominate a payment sum for each child. There are currently sum-insured guidelines including upper limits of around $100,000 to $200,000, depending on the insurer. Contact your nearest AFRM office (see back cover) or send a request for a specialist medical team adviser to contact you at

7 Extra Information Underwriting To process an application, the insurance company may request medical detail or tests and/or financial evidence. The underwriting requirements vary, based on the type of product and benefit level applied for, your age and any preexisting medical conditions. Typical underwriting requirements may include blood screens for HIV and hepatitis B & C, multiple biochemical analysis (including cholesterol etc) and medical examinations by your usual doctor. We will assist in organizing all underwriting requirements. The insurance company will bear the costs of any tests/medical examinations they require in underwriting your application. Stepped or Level premium rates All products have the option of level or fixed premium rates, however these are considerably more costly than stepped rates in the early years of a contract. Generally, it will take at least 10 to 15 years before these rates can yield a premium saving. However, with contracts continually improving and premium prices constantly changing, there is no guarantee that level premium rates will be more appropriate or costeffective even over the long-term. Wills / Powers of Attorney Your Will is one of the most important components of your estate planning process. Ensuring your Will is appropriate and up-to-date is essential to ensure your assets are distributed as you would want them to be in the event of your unexpected demise. Similarly, ensuring you have a power of attorney in place is important. It ensures your best interests will be considered in the event of you becoming unable to make your own decisions, either permanently or temporarily (for example a trauma event). A trusted person should be granted power of attorney to ensure decisions are made in your best interests should you become unable to make your own decisions. AFRM Offices & Contact details Parramatta Newcastle P: (02) Central Coast P: (02) Melbourne P: (03) Suite 1, Level 2, Berry Square, 77 Berry Street NORTH SYDNEY NSW 2060 Sydney CBD Level 5, AMP Centre, 50 Bridge Street, Sydney NSW 2000 Level 5, 69 Phillip Street, Parramatta NSW 2150 Castle Hill Suite 27, 3-9 Terminus Street, Castle Hill NSW 2154 Suite 14, Level 2, 133 King Street NEWCASTLE NSW 2300 F: (02) Po Box 682, Newcastle NSW 2300 Suite 3.28 Platinum Building, 4 Ilya Avenue Erina NSW 2250 F: (02) Po Box 3403, Erina NSW 2250 Port Macquarie P: (02) Suite 26, Level 1, Colonial Arcade, Hay Street Port Macquarie NSW 2444 F: (02) Po Box 1768, Port Macquarie NSW 2444 Level 5, 750 Collins Street Melbourne VIC 3008 F: (03) Po Box 647, Collins Street West Melbourne VIC 8007 Please note, the information in this document has been prepared by Australian Financial Risk Management Pty Ltd (AFRM) ABN AFRM hold an Australian Financial Services License (AFSL) The information is for general purposes only and has been prepared without taking account of your objectives, financial situation or needs. AFRM recommends that you seek professional advice before acting on any information contained within this document.