Most of us have been touched by having someone we love be diagnosed with, battle or suffer with cancer. Most recently, a lifelong girlfriend of mine passed away after a 7 year fight with breast cancer, at the age of 44.
Thankfully, I’d set her up with a Trauma Policy some years before and the lump sum financial assistance she received meant she had treatment options and could explore the avenues of her choice. Although her only lament was, that she wished she’d gotten more.
Trauma Insurance provides cover for many individual events (up to 50 with some providers) which include breast cancer, and pays a lump sum regardless of whether you’re prevented from working or not. It can provide invaluable financial support, security, and importantly options for treatment, care and recovery.
Women have unique needs. As a result, some insurers provide financial protection for health conditions of particular concern to women. Almost 81% of female Trauma claims with CommInsure are for cancer, making it undoubtedly the leading cause for claims.
Listen to Susie’s story here:
If you’d like to contact one of the WPP Advisers for a review of your situation, call the office on 07 5593 6895 to talk to one of our risk specialists now.
A recent chat with a friend soon turned into a request for a review of his financial situation, as I had a bit of time over the weekend we ended up having this very important discussion.
The lack of proper financial advice soon became very evident when looking at his situation. The family home still has a substantial mortgage; and he and his wife also own an investment property, which is being serviced with an interest only loan.
The husband is 54 years old, and is the main income earner who works in a very physically demanding job.
When the simple question was put to him that should he be injured and could no longer work or worse still, suddenly pass away, in what financial situation would his wife and daughter find themselves in?
His answer staggered me, he said: “Well, my wife could go back to work and my daughter is at uni, so she still has many years ahead of her to earn an income, my family will be fine and besides, I have $120,000 in my six superannuation funds which will be more than enough for them.”
Wow,! His 52 year old wife would have to go back to work, sell the investment property which would not generate any profit at current market conditions, his super payout would not cover the amount owing on the family home and his daughter would be left without any financial legacy from her father. Besides this worrying situation, if he was injured and could not work for any length of time, this family would be in dire straits.
Unfortunately this individual has set himself and his family up for failure in the event of the unexpected. What a sad legacy to leave his family.
I explained that this situation had an easy fix and provided him with a few strategies to think about, and showed him how inexpensive it would be. One of these was rolling his super into one preferred fund and saving hundreds, if not thousands of dollars a year in fees. As an option, death cover could be funded through the super, incurring no ‘out of pocket’ expense to the family but enabling them to be debt free in the event of his premature demise.
Having left this information with my friend for a week or two, I contacted him to see if he had given his situation any further thought and if he wanted to implement any of the strategies we spoke about. Once again his answer was very disappointing, although he thought doing the super consolidation was a good idea, he still didn’t think that he needed any other insurance.
It is not amazing that most people are willing and do provide for their families when they are alive, this is who we are as humans and it is what we do. It is the nature of things. What is truly staggering though is that so many people still fail to provide for their families once they have passed away.
In the end, the choice is always ours, we can ensure our families are well cared for financially once we are gone, or we can fail them, leaving them at a time of sadness and distress with a financial burden that could so easily have been avoided.
Unfortunately, financial literacy still isn’t a staple part of our education system, and until that time comes, people will continue to struggle with Credit.
Want to finally understand how credit can work for you?
If you can actually afford to borrow?
Want to know how to find out if the people you’re dealing with are reputable?
What options do you have if things go bad and you can’t pay your debts?
Where can you turn to complain?
Download the MoneySmart brochure here and start investing in your financial literacy. Learn tips on credit cards, car loans, rent to buy schemes and mortgages.
Isn’t it time you took the challenge today to get a handle on your finances?
Download here: http://ja3g3rz5bt9fph259ux610b4.wpengine.netdna-cdn.com/wp-content/uploads/sites/13/2014/07/Credit-Loans-and-Debt.pdf
What’s your biggest financial challenge?
We all have an area of our finances that we know could do with some attention but
let’s face it – most of us would rather think about something else. The problem is
that by doing that, we’re costing ourselves money – and more than likely causing
ourselves unnecessary stress.
For instance, if you have several superannuation accounts, you are probably paying
account and management fees across all of them, rather than having that money
working for you and building your retirement savings.
Similarly, if you have a credit card debt of $3,000 and you only make the minimum
repayments, this could cost you up to $6,000 in interest charges alone.
None of us like to cost ourselves money but the task of fixing the situation can seem
like too much hassle: “Where do I start? Who do I ask? Am I making a mistake?”
These are the questions we ask ourselves and without easy answers, we often opt to
do nothing.
MoneySmart Week understands these are common challenges and aims to do
something about them. Running from 1 – 7 September, MoneySmart Week is an
independent, not-for-profit initiative designed to raise awareness of the importance of
financial literacy and to encourage all Australians to take action on their finances. The
initiative was founded in 2012 by members of the Australian Government’s Financial
Literacy Board, led by Paul Clitheroe AM.
This year, they’re running the MoneySmart Week Challenge.
The MoneySmart Week Challenge asks people to pick one financial challenge to
address and provides a free, step-by-step guide to completing the challenge with a
range of great resources that can help answer any questions you have along the way.
People can sign-up online and pick from the following Challenges:
• Ditch Your Debt – credit and debt
• Sort Your Super – superannuation
• Manage Your Money – budgeting
• Protect What’s Precious – insurances
• Build Your Worth – saving and investing
• Plan Ahead – estate planning
• Female Financial Fitness
There’s even a savings Challenge for secondary school-aged students: Start Early.
The best way to deal with money stress is to become financially resilient and we all
know that resilience is built from facing up to our challenges. By taking simple steps
to improve your money health, you will save yourself money and build your resilience.
Take the first step today by signing up for the MoneySmart Week Challenge at www.
moneysmartweek.org.au
Lots of people are now very interested in the option of borrowing through their Self-Managed Superannuation Fund. An option that has come under the spotlight for the Financial System Inquiry.
The ability to borrow is a great benefit to having an SMSF, but should never be the core focus and certainly isn’t appropriate for all funds.
Since 2007, the Limited Recourse Borrowing Arrangement (LRBA) for loans by an SMSF, have been available.
The industry body SPAA (SMSF Professionals Association of Australia) has a set of guidelines to ensure responsible approach to borrowing.
Here’s their Top 5 for SMSF Trustees to ensure they check off: 1) Understand the technical rules
Four technical rules apply if trustees are to comply with the LRBA requirements:
– The loan must be limited recourse. This means the loan is taken out separately to other investments in the fund. Therefore, if the arrangement fails — for example, if the fund can’t make interest repayments — then the lender can only claim against the specific property, not the other assets in the fund;
– A single acquirable asset must be purchased;
-The asset must be held in trust for the fund: and
– The fund must have the right to buy the asset after the loan has been paid off. 2) Ensure it is a worthwhile investment
Putting a property in a super fund won’t make it a better investment. It’s important that trustees consider a number of factors in order to ensure the property is a good investment. Like the level of income expected, growth prospects for the area, possibility of finding tenants, ongoing expenses etc.
While LRBAs can offer flexibility, restrictions apply on improvements to the property or when replacing the property. Rent should also be at commercial rates and any residential property must be leased to unrelated parties, companies or trusts.
The type of property may also be an issue with the bank. The bank may not be prepared to lend on some types of commercial or residential property.
Also check legal fees and stamp duty, or property-related expenses such as rates and taxes. Trustees should also be mindful that a change in interest rates or loss of a tenant will affect the net income received. 3) Make sure you can service the debt
The most obvious consideration for trustees is to ensure that any gearing will not be excessive. Remember, borrowing to invest can magnify losses as well as gains.
If the property is negatively geared you really need to do your sums to make sure the fund will have enough cash flow to be able to pay the expenses, which are over and above the income that will be received from the renting of the property.
Cash flow could come from income on other investments of the fund or from contributions, such as those made by an employer, or personally.
Neutral or positive gearing is advantageous as it doesn’t deplete the fund’s resources. 4) Look at insurance needs
Insurance helps to protect the fund and the property against the loss of a member. Trustees should look at life insurance, total and permanent disability (TPD) insurance and income protection as part of their overall insurance needs.
Proceeds from an insurance policy can be used to contribute to the outstanding loan on the LRBA. 5) Finally — put an appropriate borrowing strategy in place
Besides the previous four tips, there’s a number of key criteria for an appropriate borrowing strategy:
– Age of the fund members. Questions around the fund’s ability to pay for loans are pertinent if the members are retired;
– Diversification. The age-old investment rule applies here. A diversified investment strategy simply reduces the investment risk of a fund;
– Don’t choose a property under the borrowing rules that will need modifications within a short timeframe as the whole arrangement may need to be restructured, which may prove costly; and
– Avoid property spruikers and seminars designed to ‘stitch you up.’ If it’s too good to be true, then it probably is.
Most of us have been touched by having someone we love be diagnosed with, battle or suffer with cancer. Most recently, a lifelong girlfriend of mine passed away after a 7 year fight with breast cancer, at the age of 44.
