Home – New Forums Starting your journey Death/Disability and Income protection insurance

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  • #967466
    ray_223
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    Hi All,

    As per
    http://www.flyingsolo.com.au/forums/other-discussions/5879-put-my-notice-yesterday-4-weeks-im-free.html
    I will soon by 100% self employed and wondering what sort of death/disability/income protection insurance other soloists have?

    Any recommendations?

    Edit:
    Currently I have death/disability insurance bundled in with my employee based super – but when I stop being employed I am no longer eligible.

    Thanks,

    #1026389
    mcboom
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    It all depends on your individual situation ie. debts, dependents etc.

    #1026390
    ray_223
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    Thanks McBoom,

    I’m after ideas on what everyone else does?

    what type of insurance do you have?
    who with?
    and what policies (without into too much detail for personal reasons).

    Thanks,

    Ray

    #1026391
    Aikibizcoach
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    Hi Ray
    I’m afraid McBoom is right. The personal risk insurance policies appropriate to your needs has little to do with what other people have. For example, the income protection policy I have may not be appropriate for you. All the major companies have pretty good IP contracts these days but some contracts suit office workers, others suit professionals and some are tailor made for trades people. So it depends. There is not as much variation with Term & TPD (total & permanent disability) insurance, but they are not all the same either. As for the amount of cover you need, that depends entirely on your personal, family and financial circumstances. You should seek personal advice from a licensed adviser.

    I recall that you said that your Life & TPD insurance is currently held in superannuation. It is often the case that people are automatically accepted (without personal underwriting) for defined levels of insurance simply by virtue of joining their employer. If that was the case, you were effectively part of a group scheme. When you become self employed however, it is likely that you will have to undergo personal underwriting. So the amount of insurance offered and the price you will ultimately pay for it will be affected by your age, smoking status, health status (including height-weight ratio), your pastimes, and your occupation. Family medical history (Mum, Dad, brother, sister) also plays a big part when you are being underwritten for a Trauma / Critical illness insurance.

    In addition to asking ‘which is the policy most appropriate to my needs?’, you should also be asking ‘will the company pay my claim?’ and ‘will they provide a good service if / when I am on an IP claim?’ The Australian risk insurance market has narrowed a lot after years of takeovers and the remaining players are mostly large reputable companies who compete hard for business. Mostly, the claims that are not paid usually involve some level of misrepresentation or non-disclosure by the person applying for insurance.

    So as you head towards your freedom in 4 weeks time, consider this. Depending on your health, you may be eligible for life insurance and perhaps some TPD insurance when you start your new business. It will depend on underwriting. However, the stumbling block for you could arise in the area of income protection. You have to substantiate your income and, once you are self employed, the underwriter will probably ask for 3 years of financial statements for your business. You won’t be able to provide that for the next 3 years. So anyone in Australia leaving employment to become self employed should consider income protection well before making the leap. An ‘agreed value’ contract would help the cause. Some companies offer them but not everyone is eligible. For several reasons, a salary continuance benefit in your work superannuation fund is not the same thing as a personal income protection policy.

    I suggest you see your financial planner or risk insurance broker and talk all of these issues through.

    I hope your new venture goes well.

    Gary
    ________________________________________________________
    Gary Weigh, Business coach, Financial planner and Aikido enthusiast
    http://www.aikido-secrets-to-calm-success.com

    #1026392
    Nick Lloyd
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    Hi Ray,

    Firstly, I agree with everything Gary has said – excellent general advice.

    To get a basic explanation of the different types of cover and what they are for, you could have a look at this 1 pager on personal risk insurance I’ve put together for my clients:
    http://www.acceleratefinancialservices.com.au/pdf/AFS%20Personal%20Risk%20Insurance%20Flyer.pdf

    The only other thing I would add is that some insurers now offer “takeover terms” whereby they will give you the same terms on existing cover that you transfer over to them (up to a maximum limit). The advantage of this is that if you have cover in force with your corporate super at standard rates, you can keep this cover at standard rates without having to go through the underwriting process which may attract a loading to your premiums or exclusions to your cover, depending on your health and other factors which Gary explained.

    Please feel free to contact me if you have any further questions.

    Good luck with the new venture.
    Cheers,
    Nick.

    #1026393
    Watotech
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    Hi ray_223

    I recently went through the same thing in regards to income protection insurance and eventually got knocked back due to a pre existing illness and also because of the cost involved.

    RACV offer income protection that excludes any preexisting illness. Their minimum level of cover ($400 a week I think) was 1200 per year.

    #1026394
    Nick Lloyd
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    Hi Ray,

    One last thought, should you wish to have a conversation with a more local financial planner, I know a good one who’s at Bathurst. I know it’s not that close to Bathurst, but at least closer to Sydney. Please let me know if you’d like his contact details.

    #1026395
    ray_223
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    Thanks for all of the suggestions – I’m just following up on some local leeds first.

    Thanks again

    #1026396
    Samith W
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    I’m with Guardian, http://www.guardianinsurance.com.au/Income-Protection-Insurance.aspx haven’t had any issues with them but keen to explore my options, would be interested to see what others got and benefits.

    Cheers!
    Samith

    #1026397
    Reenie@Striking Stitches
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    I am interested in more info about this. I understand that each situation needs to be taken on it’s own merits.
    A recent call-back from one consultant told me I could not get cover because:
    I work from home, and,
    that my current income (approx $15K) is too low to get a payout).

    Surely there is someone out there that can offer me cover? The prospect of having to exist on Centrelink payments is not one I relish, although I could do it as a last resort.

    #1026398
    SalenaKnight
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    I have death/TPD with my older super fund (gov’t based). I specifically checked out whether they would continue to cover me once I left, and they said as long as there is money in the account, I would be covered.

    Obviously this is great for me, as I’m not handing over cash in the hard start-up years, but I understand that it will affect my eventual super payout, but have other investments in place that I expect to look after me in retirement.

    #1026399
    Past-Member
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    Reenie – this was an old thread that you resurrected. It’s not just income that is a problem – it’s age. I hope you are younger than 50 because once you get to a certain age the insurance companies do not insure anything, let alone loss of income insurance for solos. Loss of income and death insurance is not possible for many of us which is really is frustrating when you have a husband that is still working fulltime at 70 because there’s no point retiring since the financial crisis lost nearly everything. On his 70th birthday he received a letter from the Super company that did not congratulate him on his age, but told him that even his small amount of funeral insurance was not payable now as he was too old. Happy birthday from the insurance company – NOT.

    I have never had income protection because I never had a regular income to prove with the same longterm clients. My customers are different each week. Solos are a real problem for insurers.

    I do have business insurance however with the NRMA.

    So, maybe having a good savings investment plan is a better option for many of us.

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