We often don't recommend having income protection insurance inside super but acknowledge that it is better for cash flow. Here's an article which has a good summary of why outside super is better: http://www.moneymanagement.com.au/article/Income-protection-inside-or-outside-super/489936.aspx
Income protection insurance
- Thread starter StuartW
- Start date
I have a very sad recent story in which a colleague of mine's wife was feeling unwell so went for a check up at the doctors and 2 weeks later was dead from bone and lymph cancer. She had never worked and so was uninsured however because she had never worked, he has never had to cook, clean, do the washing etc. He has a 16 year old daughter at home who is getting incredibly sick of spaghetti Bolognaise which is all her dad can cook.
What is interesting is that he is now looking to employ a housekeeper and he is now having to 'value' the input that his wife made to the household.
What is interesting is that he is now looking to employ a housekeeper and he is now having to 'value' the input that his wife made to the household.
ah yes
the uninsured spouse syndrome ......................
ta
rolf
the uninsured spouse syndrome ......................
ta
rolf
case by case obviously
as a minimum I recommend for the remaining cost of childcare and housekeeping, up to a point where the premium becomes silly.
ta
rolf
as a minimum I recommend for the remaining cost of childcare and housekeeping, up to a point where the premium becomes silly.
ta
rolf
I will give you a running example- An insurance policy for my IP and Life insurance premium is $2200 p.a. If I was a teacher earning $75,000- After tax and Medicare I may receive $59,000. I would then spend $175pw on groceries, $100 pw on all car expense, $25 pw on medical, $150 pw on phone rates, electricity, water, gas, house insurance, mobile, internet etc, $50 pw on clothing, education, sports, entertainment and $100 on the kids where applicable(christmas gifts, beer, cigarettes etc), $350pw on the mortgage or rent, $50 miscellaneous (holiday, furniture, accountant, bank fees, paint, hair etc) = $1000 pw = $52,000.
Your yearly surplus is approximately $59,000 - $52000 = $7000.
Your personal insurance is $2200 / $7000 = 33%
My thoughts are: this is almost the cost of an investment property. I am happy to have super sort out this bill and I will keep the 33% of my surplus funds for a rainy day or like.
I understand we are all different and all have different numbers then listed above, but, thinking like this is why I retired at thirty three with 8 properties on a teachers wage.
Your yearly surplus is approximately $59,000 - $52000 = $7000.
Your personal insurance is $2200 / $7000 = 33%
My thoughts are: this is almost the cost of an investment property. I am happy to have super sort out this bill and I will keep the 33% of my surplus funds for a rainy day or like.
I understand we are all different and all have different numbers then listed above, but, thinking like this is why I retired at thirty three with 8 properties on a teachers wage.
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Sure - and if you knock out home & contents, health and car insurance you'd have even a larger surplus.
It's all about risk. If you are uninsured, you risk loosing the lot. It's a personal call - so long as you realise the risks involved.
For me, there a lot of hard work involved in getting to 8 properties. Why risk losing them.
It's all about risk. If you are uninsured, you risk loosing the lot. It's a personal call - so long as you realise the risks involved.
For me, there a lot of hard work involved in getting to 8 properties. Why risk losing them.
In most situations IP insurance outside super is better due to a longer benefit period amongst other things. It’s a false economy to put it inside super as you may find out that you'll get a limited benefit if you do claim because some of the benefit might be trapped inside super.
That said, IP in super is better than none at all.
That said, IP in super is better than none at all.
Times are changing, you can now get IP insurance up to 65 years of age. Further, under APRA's conditions of release policy, Superannuation Circular No. I.C.2 -Payment Standards for Regulated Superannuation Funds. You will find the release is not as difficult as is often published.
I have also provided relevant sections:
Temporary incapacity
Regulations 5.08, 6.01(2) and Schedule 1 (Part 1)
84. Subject to the governing rules of the fund a member may access benefits where the trustee is satisfied that temporary incapacity exists, i.e. the member has temporarily ceased work as a result of physical or mental ill-health which does not constitute permanent incapacity (refer paragraphs 89 to 91). It is not necessary for the member’s employment to fully cease.
85. Benefits may be paid where a member makes a partial return to gainful employment whilst incapacitated, provided that the member’s remuneration plus the temporary incapacity benefits do not exceed the member’s remuneration at the time the member became ill.
It is easy for many wealthy people (including FP's) to say spend your last bit of hard earned cash on insurance, so I often encourage this new way of thinking. Like you have mentioned Stuart, it is better than no insurance.
I have also provided relevant sections:
Temporary incapacity
Regulations 5.08, 6.01(2) and Schedule 1 (Part 1)
84. Subject to the governing rules of the fund a member may access benefits where the trustee is satisfied that temporary incapacity exists, i.e. the member has temporarily ceased work as a result of physical or mental ill-health which does not constitute permanent incapacity (refer paragraphs 89 to 91). It is not necessary for the member’s employment to fully cease.
85. Benefits may be paid where a member makes a partial return to gainful employment whilst incapacitated, provided that the member’s remuneration plus the temporary incapacity benefits do not exceed the member’s remuneration at the time the member became ill.
It is easy for many wealthy people (including FP's) to say spend your last bit of hard earned cash on insurance, so I often encourage this new way of thinking. Like you have mentioned Stuart, it is better than no insurance.
I reckon you're mad if you don't have income protection. Mine costs around $150 a month but it's a great cover. I have a 30 day waiting period like most others, but mine has a special "day 1 accident" option that means I only have to be unable to work for 4 consecutive days. At the end of the 30 day waiting period I would get back-paid right to the start, based on the number of days I was unable to work.
Last year I broke my arm, but I was only off work for a week because of the work I do. The insurer paid me a full month of benefits because the type of injury was eligible for an immediate payment.
I'm not a tradie, but I use these guys: www.tradeinsure.com.au. They seem to understand how it works better for the self-employed.
Last year I broke my arm, but I was only off work for a week because of the work I do. The insurer paid me a full month of benefits because the type of injury was eligible for an immediate payment.
I'm not a tradie, but I use these guys: www.tradeinsure.com.au. They seem to understand how it works better for the self-employed.
Angela, which super is she with?
I think I need to seriously think about getting some cover ...
i have it it costs me 160 p month once i have enough equity and passive income i will can it. only reason i do keep it is for my young family..
however i do still hold it due to fear of the future in terms of my family's well being.
this is were insurers make their money by fear of the unknown in the human lifespan anyway just my view only........
however i do still hold it due to fear of the future in terms of my family's well being.
this is were insurers make their money by fear of the unknown in the human lifespan anyway just my view only........
this is where they make their money.... the insurance is good value but most people drop it prior to when the risk really goes up
There was a study done in the USA a few years ago about this.
I don't have time to do a search for it but I remember being shocked by the results. Apparently the amount that a working husband would have to pay for the work that a non-income producing mother of 2 young school age children does was something like USD$101000 per annum.
We do not have the type of insurnace you are referring to.
We have life insurance, in case one or both of us die.
Our properties have Loss rental Income, which is a bit different, as something terrible has to happen to that property.
Since our properties are CF+, they will produce income whther we are there or not.
So for us, it is not required.
We have life insurance, in case one or both of us die.
Our properties have Loss rental Income, which is a bit different, as something terrible has to happen to that property.
Since our properties are CF+, they will produce income whther we are there or not.
So for us, it is not required.
I thought it was all now called "Personal Leave" and is cumulative (what you don't use rolls into the next year)?
i.e. Personal Leave now encompasses
Sick Leave taken by an employee because of a personal illness or injury, of the employee or
Carer’s Leave taken by an employee to provide care or support to a member of the employee’s immediate family due to personal illness or injury of the family member or in an emergency situation.
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