Typically you would expect that you would earn an income and grow your assets until you retire and then those assets would be depleted over your retirement, possibly with some left for your estate.

But what would happen if you were seriously injured or had a serious illness sometime before you retired? Or if you died? You would lose your ability to earn an income and you – or your family – would have to draw down your assets to survive (see the red line in Chart 1 below). Of course, your plans for a financially secure retirement for you and/or your family might also evaporate – depending on the length of time you were unable to earn an income.

Safeguard your vision of a secure financial future if the unexpected happens

Most families are carrying significant financial risk should the unexpected happen. The big question you have to answer is:

‘Would my family be able to maintain their lifestyle if I no longer earned an income?’

If your answer to this question is “no”, you need to consider transferring that financial risk to life insurance companies. They have a range of insurances which can help you fund your risk mitigation plan and give you enormous peace of mind – all for a small fraction of the sum insured each year.

Insurance can help your family maintain their lifestyle if life doesn’t go to plan

Personal insurances worth considering include:

  • Term life insurance – pays a lump sum on the death of the insured
  • Income protection insurance – replaces your income if you are unable to work due to sickness or injury. It provides a monthly payment of usually up to 75% of your pre-tax income.
  • Trauma insurance – pays you a lump sum on the diagnosis of a specified non pre-existing illness or injury, generally including heart attack, stroke, cancer, and paraplegia.

The Australian Unity Insurance Portfolio Construction Process

To help ensure your risk insurance plan is properly funded, we employ our disciplined eight-step insurance portfolio construction process.

We start by assessing your current situation – if the unexpected happened today, what would be the financial shortfall? In other words, how much money would be required for you and/or your family to replace your income… and pay for other expenses?

We then develop strategies to help you transfer that risk to insurance companies, and identify which types of insurances you require. We also help you qualify for tax deductions on the annual premiums where possible.

Next, we research the major, reputable insurance companies to find the insurances which provide you with the right level of protection, including the definitions and exclusions which best suit you and your family. Of those insurances which meet your needs, we obtain a number of quotes to ensure we recommend the most cost effective products for you.

The next step is for you to determine if that cost is affordable. If it’s not, you might choose to reduce the cost by reducing the amount insured – in other words, retaining some of the financial risk yourself.

Once you have made that decision, we finalise your risk transference plan, and arrange the purchase of the recommended insurances on your behalf. That may require you to undergo a physical exam from a doctor (which the insurance company should pay for), as well as completing the paperwork (we will assist you with this).

Once your insurance portfolio is in place, we will regularly review it – and your situation – to ensure your portfolio continues to be relevant and cost effective.

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Call Invest4Life on (07) 5456 1355 to discuss your insurance needs with our Financial Advisers.

Disclaimer: This information has been produced by Australian Unity Personal Financial Services Ltd (‘AUPFS’) ABN 26 098 725 145, of 114 Albert Road, South Melbourne, VIC 3205, AFSL & Australian Credit Licence 234459. Any advice in this document is general advice only and does not take into account the objectives, financial situation or needs of any particular person. It does not represent legal, tax, or personal advice and should not be relied on as such. You should obtain financial advice relevant to your circumstances before making investment decisions. AUPFS is a registered tax (financial) adviser and any reference to tax advice contained in this document is incidental to the general financial advice it may contain. You should seek specialist advice from a tax professional to confirm the impact of this advice on your overall tax position. Nothing in this document represents an offer or solicitation in relation to securities or investments in any jurisdiction. Where a particular financial product is mentioned, you should consider the Product Disclosure Statement before making any decisions in relation to the product and we make no guarantees regarding future performance or in relation to any particular outcome. Whilst every care has been taken in the preparation of this information, it may not remain current after the date of publication and AUPFS and its related bodies corporate make no representation as to its accuracy or completeness. Published: February 2017 © Copyright 2017