Keep your insurance going in tough times
During tough economic times, you may look for ways to cut your expenses. However, when reviewing your budget, insurance should be one of the last items examined.
If the unthinkable were to happen and you didn’t have adequate insurance, the financial impact on you and your family could be quite dramatic. Regardless of whether you’re feeling the squeeze right now or looking for ways to reduce your expenses, there are a number of ways many of us can make personal insurance cover more affordable.
Buy your insurance in super
If you buy your insurance through a superannuation fund, you may be able to take advantage of a range of upfront tax concessions generally not available when insuring outside of the superannuation environment.
Additionally, you could arrange to have your premiums deducted from your existing superannuation account balance without making additional contributions to cover the cost. This can make your insurance more affordable if you don’t have sufficient cash flow to fund the premiums during periods you find yourself on Struggle Street. The trade-off with this option is that you will use up some of the money you could otherwise have used to fund your living expenses in retirement.
While this could impact your lifestyle when you are no longer working, think of what could happen to your family’s lifestyle in the interim if the worst were to happen. Without insurance, your family could run down your savings very quickly and face financial difficulty well before your intended retirement date.
Pay level premiums
If you elect to pay level rather than stepped premiums, you could reduce the long term cost of your insurance considerably. This is because, over time, level premiums can end up cheaper, often at a stage in life when you need the cover the most.
Pay your premiums annually
In some cases, you may be eligible for a discount if you pay your premiums annually, rather than monthly.
Consolidate your insurances
Holding all your personal insurances under the one policy could help you save on fees. Fee savings could also be made by consolidating the insurances held by yourself, your spouse and other family members (in some cases) into the one policy.
Choose a longer waiting period and shorter benefit payment period for Income Protection
Most income protection insurance policies enable you to choose how long you will need to wait before the insurance benefit will start to be paid and how long it will be paid for. Choosing a longer waiting period and a shorter benefit payment period can reduce your premiums, in some cases significantly.
Reduce the sum insured
As a last resort, you could consider insuring yourself for a lower amount. If something were to happen to you, this would clearly be a better option than cancelling your insurance completely. But you also need to keep in mind that reducing the sum insured could leave you (or your family) without sufficient money to meet your financial goals should the unthinkable happen.
To better understand the concept of life insurance follow the link below to our website and then left click on “Understanding Insurance” – http://www.plan2prosper.com.au/benefits/understanding-series
With so many different types of life insurance and options available it’s important to discuss your needs with someone who has more than a basic understanding of the topic. Determining an appropriate insurance solution or an acceptable compromise can be very complex. A client commented to me it was a bit like an onion … at face value it’s just an onion, but the simple onion has many layers which can be peeled back, sliced, diced, cubed, filed, and cried over depending on preferences.
Where to from here?
If you would like to discuss the topics raised or if you would like more information, speak to your financial adviser or contactDan Smithof Plan 2 Prosper on 07 49265 570.
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Dan Smith is self employed and is for many families their trusted Financial Planner based in Rockhampton. He has clients in various locations throughout Australiabut predominately in Central Queenslandand specifically the geographic area encompassed by the Rockhampton Regional Council.
This information is intended to only provide you with general information and, while the sources for the material are considered reliable, no responsibility is accepted for any inaccuracies, errors or omissions. Before making a decision based on this information, you must consider its appropriateness having regard to your objectives, financial situation and needs. We recommend you obtain professional financial advice specific to your circumstances.
Dan Smith and Dancin Pty Ltd ABN 71 531 338 371 trading as Plan 2 Prosper are Authorised Representatives of GWM Adviser Services Limited ABN 96 002 071 749 trading as MLC Financial Planning, an Australian Financial Services Licensee, with its Registered Office at 105 – 153 Miller St, North Sydney NSW 2060