March News Update

Risk management:

Can risk be managed? Obviously, there are things within business and your family life which are outside of your control.  But, what about the things you can control?

• Budgeting.  Do you have a firm grasp on your incomings and outgoings?  Budgets can be as simple as you like and the bonus of a budget is that it makes you accountable for your spending.  Budgeting and planning for contingencies can be a huge component of your risk management strategy if done correctly.
• Superannuation.  Are you, or should you be contributing to your superannuation?  How would you like your retirement to look and can this be achieved?   If you’re not sure, have a chat to a financial adviser specialising in superannuation.  We know some great ones we can refer you to.
• Estate planning.  Do you have a Will and Power of Attorney in place?  Are they current?  If not, speak to a lawyer about getting these sorted as soon as possible.  We can’t stress enough the importance of ensuring your final wishes can be carried out.
• Insurance.  It’s easy to remember to protect your car and your house but don’t forget to protect your family.  How would your family be impacted if you or your partner got sick, were unable to work or in the worst case scenario passed away?  Do you have enough life/TPD cover to pay out debts (if this was your goal), is there enough income protection cover to provide an income and would you need business expenses cover to help with the business overheads?  If you are a stay at home parent would your partner have to stop work (or scale back) to take over some of your duties or help care for you in the event you were ill?

Risk management doesn’t have to be an overwhelming task if you take one step at a time.  Your future self will thank you for it – we are sure of it!

Income protection

Income protection, or salary continuance, provides a regular income during the period you can’t work,  if you are unable to work due to sickness or injury.

A waiting period usually applies before payments commence. You can generally choose a waiting period
between 14 days and two years. Choosing a longer waiting period usually results in a lower
premium.

Current income protection policies usually pay up to 70% of income. If you are lucky enough to have an older, legacy policy which covers an ‘agreed value’, the monthly payment is stated in the policy and this is the amount that will be paid if a claim is approved. ‘Indemnity value’ means the monthly payment amount will be determined at the time of making a claim, generally based on up to 70% of the income earned in a period prior to the claim.

The cost of income protection premiums is generally tax deductible, which helps to reduce the
effective cost of the insurance. In the event of a claim, the monthly payments are taxable
income. It is important to note that you can only claim a deduction for the premium cost if your
policy is owned outside of super (otherwise the cost is deductible to your super fund).
If you’d like to explore your income protection options give us a call!