protecting ones family

From: Richard Ellis


G'Day All,

I am new to this forum but did search the archives before posting on this topic.

I am wanting to expand my investment in property as my wife and I seek financial freedom. But I want to make sure my wife can still obtain our goals should my life be prematurely snuffed out - perish the thought!

My income is our sole income at present. My thoughts were to take out term life insurance to pay out our debts + provide a lump sum to invest. Then my wife can live off the rent and the interest from the investments.

I would appreciate any other thoughts or ideas.

Much Thanks,

Richard.
 
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Reply: 1
From: Rolf Latham


Hi Richard

Term life or "throw away" life insurance is a cheap way to protect yourlelf. There is no "investment" component and there is with "whole of life" policies.

Typically depending on your risk profile incl age expect to pay 17 to say $ 50 per month per 100 000 coverage.

The two things that are a little more exxy to insure against but possibly more important are:

1. Your income generated from your work or business
2. In some cases death is not the worst financial impact, long term disablement can cripple a family financially.

Also consider insuring your non-earning spouse's life because child care and associated housekeeping is real costly.

AND obviously dont forget landlords protection insurance.

AND for all of you out there that think "it wont happen to me" , I have had the unpleasant experience of two of my clients in the early 30s leaving their families prematurely AND not carrying any real insurance.

Ta

Rolf
 
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Reply: 1.1
From: See Change


Further on the topic of disability insurance ,we have two types of policy.

One is an income protection policy and the other is a lump sum disability policy which pays out on death or on permanent disability.

The important things to look at are the definitions of disability etc which can vary significantly from company to company.

Choice have done review articles on these policies . One interesting thing I found when we were getting our policies is that the insurance companies didn't volunteer to give us copies of the definitions when we made our initial enquiries. They only wanted to give us these after we had applied for the policies. They seemed surprised when I wanted to get copies PRIOR. Things might have changed since then.

see change

it's better to be guided by your dreams than your fears
 
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Reply: 1.1.1
From: Dale Gatherum-Goss


Hi Richard

Good thinking and well done. Term life insurance is a good idea for all investors.

This can be done through your superannuation policy so that it actually costs you nothing each year other than a loss to your already questionnable value of your superannuation.

The insurance is tax deductible to your superannuation fund whereas it is not to you.

Something to consider, perhaps?

Dale
 
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Reply: 1.1.1.1
From: George M


trauma is probably more important than term life insurance in some cases, as heart disease increases, insurance companies are finding that trauma is the most popular and most benificial as it will protect you while you are still alive in intensive care etc (you dont have to die for a payout) and you can still get your super fund to pay for it. however i have heard it is better for some to have 50% of the cover outside super.

George
 
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Reply: 1.1.1.1.1
From: Richard Ellis


Thanks Rolf, See Change, Dale & George for taking the time to reply. Seems my thinking was around the mark but you have given me a couple of things to consider.

Thanks again,

Richard.
 
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Reply: 1.1.2
From: Iris Heyne


Hi,
I'm just trying to find out more about life , Permanent disability and Income Protection Insurance, can you give me some hints? There are so many brokers and web sites that I find it hard to choose. We're after about exactly the kind of insurances that you have.
Thanks Iris
 
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Reply: 1.1.2.1
From: Paul Zagoridis


As my structure owns a positive cashflow portfolio I don't need to pay out the loans in the event of my death or permanent disability.

Therefore I have 500K in term life, and 100K in trauma. I suspect I am barely insurable for income protection, so it would cost too much. I set a premium budget before I got insurance because brokers know how to prey on your fears. My first insurance quote came in at $1500 per month - that's a lot of IP's in my book.

This coverage costs me less than $100 per month. I invest the difference.

Note my trauma cover is to cover medical costs. Either I get better or I die. If I get better, hooray. If not, Nella enjoys half a mill and a positive IP portfolio.

Paul Zag
Dreamspinner
The Oz Film Biz site is archived at...
http://wealthesteem.dyndns.org/
 
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Reply: 1.1.1.1.2
From: Paul Zagoridis


Hi George

You are more likely to need trauma cover, therefore the premiums reflect it. Trauma cover is significantly more complicated and expensive than term life. Also the premiums accelerate with age.

Therefore I chose to maintain term life and invest the premium difference. Over the long term you can create a significant portfolio with what you save.

I see the choice between having trauma cover (and hoping I need it sooner) vs no trauma cover and build an asset that pays me whether I work or not.

Paul Zag
Dreamspinner
The Oz Film Biz site is archived at...
http://wealthesteem.dyndns.org/
 
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Reply: 2
From: Frank Gayton


Give some serious thought to what you can access in your employer-sponsored Superannuation fund. I have just secured for a 51 y.o. male client, $960,000 Life Insurance for $686 pa with level premiums till age 55.
 
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