» Insurance

Diabetes and the cost of insurance

admin — Mon, 24 Nov 2008 04:07:26 +0000

According to Diabetes Australia 65-80 percent of people with diabetes will die of coronary heart disease, and by 2010 DA estimates that the number of people affected by diabetes is expected to reach 1.8 million. This is scary stuff because a quick calculation suggests that potentially there is anything from about 1.17 million to 1.44 million heart attacks in Australian just waiting happen – just when it will happen is anyone’s guess.

Diabetes also causes other health problems such as blindness, kidney problems and circulation problems, often resulting in amputation. Diabetes 2 is the big concern for health officials because it is a fast growing problem linked to obesity and is considered to be a lifestyle disease.

Too much food and too little exercise is expanding people’s waistlines and bumping them into the land of diabetes 2. What’s a major concern for officials is that while diabetes 2 was once considered an older person’s disease, they are seeing more and more younger people, including children as young as six, being diagnosed with the disease.

While many may be quick to dismiss the lifestyle impact of diabetes by assuming lifestyle changes will fix up the problem, diabetes is with you for life. It’s irreversible and once you’ve got it, you’ve got to manage it forever. Indications are that children diagnosed with diabetes can expect to experience major health problems in their teens and onwards.

So what does diabetes have to do with a financial planner’s blog site?

We’re not just in the business of wealth creation, we’re also in the business of wealth preservation, and that is achieved by putting into place insurances that will protect you and your family in the event of the diagnosis of a major disease or tragedies such as death or disablement making it impossible for you to work.

And while there been a bit of hype in the media lately about diabetes and its growing impact on Australia’s health system and on a person’s quality of life, not much mention has been made about the flow on impact in other areas, such as insurance. People diagnosed with diabetes for example will struggle to obtain insurance to protect themselves and their loved ones.

Very few insurance companies will provide income protection insurance or trauma insurance to people suffering diabetes because of the strong likelihood of them requiring time off work due to illness arising from their condition. At best, you may be lucky enough to get life insurance but you will pay a higher premium for the privilege.

This may not concern you now. Perhaps you already had the right insurance in place before you were diagnosed, or perhaps you have been fortunate enough to work long enough to get some assets and some cash in the bank that may cushion the financial trauma of being diagnosed with diabetes.

But if it’s your kids who have been diagnosed with type 2 diabetes, not only will they face an uphill battle in obtaining a job because of potential health problems related to their condition, not only is their working life likely to be disrupted because of their diabetes, but they will not be able to protect themselves or the future family from the financial fallout of not being able to work because in all likelihood they will be uninsurable.

Now that’s food for thought.

Please Note:

This publication has been prepared to provide you with general information only. It is not intended to take the place of professional advice and you should not take action on specific issues in reliance on this information. In preparing this information, we did not take into account the investment objectives, financial situation or particular needs of any particular person. Before making an investment decision, you need to consider (with or without the assistance of an adviser) whether this information is appropriate to your needs, objectives and circumstances. This information is provided for persons in Australia only and is not provided for the use of any person who is in any other country.

The Black Dog is an equal opportunity mongrel

admin — Wed, 05 Nov 2008 06:33:07 +0000

Have you heard of the term black dog? It was the term used by Winston Churchill to describe the bouts of depression he experienced for much of his life. The term ‘black dog’ is often used in a colloquial sense to describe a mental illness that affects millions of people.

While the words ‘black dog’ may be a light hearted attempt to describe what may be a dark problem for those afflicted, the words ‘mental illness’ is a vague description of a variety of illness that may impact on a person’s ability to function, either briefly or for a longer period.

According to the Australian Bureau of Statistics figures, one in five Australians aged 16-85 years had a mental disorder in 2007, and while depression is not the most commonly diagnosed mental illness, it seems to be a disease that most people are familiar with. In case you’re wondering, according to ABS statistics more Australians are affected by anxiety disorders than depression.

While there is some debate on whether depression is increasing in our society or whether rates are climbing because of a wider definition of what constitutes depression, it seems that more people are being diagnosed with depression and mental illnesses.

According to Beyond Blue, something like six million working days in Australia are lost every year to depression alone. Because of this lost productivity, depression is an issue that is increasingly catching the attention of the employers, legislators, health professionals, the public – and yes, the insurance industry.

If you or anyone in your family hasn’t been impacted by mental illness, then these figures probably won’t bother you.

But if you are one of the increasing numbers of Australians who has experienced a brush with depression, no matter how brief, you may find insurance companies closely scrutinising your application for insurance, particularly if it is income protection insurance. And the insurance industry is not just interested in your history of mental illness, it may also be interested in any family history of mental illness. This is because there is often a family history of depression, suggesting a genetic association.

Don’t despair though. Most insurance companies are happy to consider your application on a case by case basis because every case is different. It might be for example that your episode may have been due to a limited and event specific issue such as post natal depression or bereavement.

When completing your insurance application form, it’s best to be honest. You may need to show that there was a cause for the depression or that you are under the consistent care of a doctor. Should you happen to make a claim due to a mental illness, like all claims you will need to show you are incapacitated and unable to work. You doctor will have to verify each month that you are incapacitated, and any insurance payments to you will be made in arrears.

The best way to find an insurance policy that meets your needs is to talk to a sympathetic and qualified financial planner. You can call us on 1300 766 323.

Please Note:

The title of this article was sourced from a book written by artist and writer Matthew Johnstone, who wrote I Had a Black Dog: His Name was Depression, about Winston Churchill and his battle with depression

Income protection for the boys

admin — Mon, 13 Oct 2008 01:34:28 +0000

Do you how much Centrelink pays for sickness benefits? In case you’re curious, it’s just over $400 a week1 for a couple, not enough to even service the weekly mortgage repayment on an average mortgage, let alone feed a family or meet the lease payment on the fancy ute sitting in the driveway.

Most of us are not interested in Centrelink benefits until we’re staring down the barrel of financial ruin brought on by an inability to meet our commitments, most often which comes about because of unexpected illness or injury. And don’t think you’re immune. While there are statistics, statistics and then there are statistics, research consistently shows that the blokes more so than the girls are likely to suffer from an illness or injury. Here are some statistics to get you thinking:

A 30 year old male has a one in three chance of suffering an illness or injury before 70.2
Men have a higher work-related injury or illness rate (74 per 1,000 men) than women (51 per 1,000 women).3
The industries with the highest work-related injury or illness rates are agriculture, forestry and fishing, and construction and mining3 – industries dominated by men.

These figures are also reflected in insurance statistics. A quick look at ING4 and Aviva5 statistics for example shows the most common occupation to become injured are tradespeople and building workers with accidents, not illness, as the most common cause for income protection claims. In 2006, 89 percent of ING’s income protection claims were from males, with Aviva reporting a similar figure of 80 percent of income protection claims coming from the guys.

While the statistics are food for thought, adequate insurance protection is essential regardless of the industry you work in. You might think you’re covered by Workers Compensation if you’re injured on the job but ABS research shows that less than half of those who experienced a work-related injury or illness received workers compensation6.

Income protection can provide up to 75 percent of your income if you become injured. And make sure you protect your insured income, not just your taxable income. This is important for those self employed people who may split their income between themselves and a family trust or for those who need to consider vehicle lease arrangements etc.

When taking out your income protection insurance also look at waiting periods, that is, the period of time at which you stop earning an income to when the benefit kicks in. A longer waiting period reduces premiums but you need to be able to cover yourself financially during this period. Also, don’t forget to regularly review your insurance situation. A good time for review is anytime there is a life changing event – a new business venture, a new mortgage, a pay rise, a new family member.

If your insurance needs reviewing, give your financial planner a call, or if you don’t have one call us on 1300 766 323 and we will create an insurance plan to suit your circumstances.

http://www.centrelink.gov.au/internet/internet.nsf/payments/pay_how_sck.htm
Based Asteron Claims Data on insured, non smoking lives
Young men at most risk of work-related injury or illness http://www.abs.gov.au/ausstats/abs@.nsf/Latestproducts/6324.0Media%20Release2005-06?opendocument&tabname=Summary&prodno=6324.0&issue=2005-06&num=&view=\
ING Retail Claim Payments 1996 http://www.lifeinsuranceadvocates.com.au/statistics/ING_statistics.pdf
Claims for Income Protection from 1990 – 2006, Aviva. http://www.lifeinsuranceadvocates.com.au/statistics/Aviva_Critical_Illness.pdf
Work -Related Injuries, Australia September 2000, ABS cat 6324.0 October 2001

Please Note:

Perkonomics – funny word, interesting concept

admin — Mon, 13 Oct 2008 00:45:50 +0000

I was having a bit of a web surf the other day and came across “perkonomics1″, described as perks and privileges given by a business to a customer, particularly those little perks that may give a client a bit of status or convenience.

Some of their examples included Lexus owners in Australia given the opportunity for free parking at a number of cultural centers, including the Sydney Opera House or Palmeiras, one of the major football teams in Brazil, reserving 5,000 seats exclusively for Visa Card customers.

When it comes to financial planning fees or insurance premiums people are quick to think of the money going out, on how much it will cost them, and not so quick to think of what they may be getting in return.

Now your insurance company or financial planner may not offer perks as lovely as a free car park at the Opera House and if they did you may want to question why, but there are plenty of pluses in sticking it out with your financial and insurance plan.

There’s the obvious benefits of course including having choices and financial freedom in your old age and protecting yourself and your family during traumatic events such as illness or injury. But what are some of the lesser known perks that may make life a little easier for you? I have listed a few below to get you thinking.

Payable benefits may be increased or free accidental cover may be offered by your insurance company if you continue your cover for a certain period of time, often about five years.
Expert advice from worldwide medical doctors and institutions if you are paid a benefit for a critical illness as part of a trauma or permanent disability policy.
Grief and support services may be offered to your immediate family as a result of a traumatic event at the time of claim.
Insurance premiums may be temporarily suspended if you find yourself without employment or on maternity leave.
Assistance towards financial planning costs may be provided if a lump sum benefit is paid.
Loyalty discounts on premiums may be offered if you personally have two or more policies.
Further discounts may be given by having multiple lives. We’re not talking about the family moggy here, we mean you may get offered a discount if you and your partner take out life insurance, and additional discounts may be given if your brother or various extended family members also take out cover. Multiple lives discounts may be offered in a business partnership as well.
In terms of investments, Agribusinesses may offer grower tours where you can undertake site tours and as an investor you may be able to buy their products at discounted prices.
Fund managers may provide seminars to help you stay educated and on top of financial markets.

Not all companies offer the same benefits, so you may need to shop around to find which products suit you. Better still, save yourself loads of time by engaging a financial planner to put together an insurance and financial plan to suit your circumstances.

1http://www.trendwatching.com

Please Note:

Is your weight fattening your premiums?

admin — Tue, 23 Sep 2008 00:10:52 +0000

Did you know a third of our population is on a diet and another third of our population is trying to maintain their weight at any one time! [i]

Australians are spending bucketloads of money in an effort to lose weight. We all know the benefits of slimming and keeping active. But losing weight won’t just trim your waistline, it could trim your insurance premiums too.

Around seven million Australians are now overweight or obese? While there are more overweight men than women (67 per cent compared to 52 per cent), obesity is more common among women (22 per cent) than men (18 per cent)[ii]. In Australia, it is estimated 20 per cent of children are also overweight or obese.

Rather than assuming scientific advances will continue to add to our life expectancy, Professor Ilona Kickbusch, an independent health consultant who previously worked with the World Health Organisation (WHO), has said that today’s generation of children may be the first to be sicker and die younger than their parents.

We all know that obesity increases the risk of many chronic and potentially lethal diseases such as heart disease, high blood pressure, stroke, kidney disease, diabetes, liver problems such as fatty liver, sleep apnoea, gout and joint and back problems.

But did you know that it may also be fattening your insurance premium? Not only is obesity becoming a problem for society, it is increasingly becoming an issue for life insurers. In the USA for example, studies have shown that there has been a substantial rise in disability claims for those under 60 with obesity related disorders[iii]

As a result insurers are charging higher premiums for those people with a high body mass index (BMI). A person’s BMI is calculated by dividing their weight in kilograms by their height in metres squared. The higher a person’s BMI, the higher their premium.

Rates of obesity are rising rapidly both in Australia and worldwide which is having a major impact on health and health care costs. It is considered to be a preventable disease and can be managed through counselling, support and lifestyle changes.

So congratulations if you have managed to significantly reduce your weight. However, unless you can keep that weight off and tell your insurer – you will still pay your higher premiums.

Get in touch with your adviser and get him/her to let your insurer know so that you can start saving money now – after all advisers get paid ongoing commission to look after you, and if you aren’t talking regularly, they are getting paid for doing nothing.

This also applies by the way if you have given up any hazardous pursuits or smoking.

Please Note:

[i] http://www.babyboomerslifechange.com.au/health-wellbeing/food.php

[ii] www.betterhealth.vic.gov.au

[iii] www.swissre.com/pws/media

What happens when your insurance company goes broke?

admin — Tue, 23 Sep 2008 00:03:22 +0000

We have had calls from clients asking questions about the financial security of life insurance companies in Australia after the recent issues with AIG in the USA.

The following Q & A has been kindly given to us by the Risk Store and is reproduced with their permission. Its aim is to help you understand how the Australian companies protect their policy holders.

I have an existing policy – will I lose this cover if the company goes out of business?
NO – under legislation another insurer will take over this policy and continue the cover as long as the premium continues to be paid.

If I keep paying an existing policy right now could I ‘lose’ the premiums?
NO – the only way you can ‘lose’ premiums is if you make the mistake of allowing your policy to lapse. You will then lose the value of your policy being a ‘guaranteed renewable’ contract. This would be a very dangerous thing to do as you may be unable to apply for insurance later if you develop a health problem in the meantime or if your health is not as good as when you took out the policy.

What if I happen to be in the middle of a claim? Will I lose the ability to continue with that?
NO – legislation will mandate that your claim in progress will be transitioned to a new insurer if necessary.

Why is my policy secure in this way?
Life insurance in Australia is protected by its own special Act of Parliament (refer to the Life Insurance Act 1995 – Act No 4 of 1995 as amended; parts 8 and 9). This forces insurance companies to place funds into a special account (called a statutory fund) that cannot be accessed by the company to use as operating funds or to distribute to shareholders, until all appropriate allowances have been made for a reasonable level of ‘expected’ claims and claim expenses.

In addition there were amendments made to these laws in the 1990s, which mean a special manager (called a judicial manager) will be allocated to the insurance company if they cannot continue to operate. This manager’s key role is to arrange for other insurers to take on the existing policies and claims.

But this is all very well in theory – does it really work?
YES – this system has already saved the policies of thousands of policyholders whose insurance is now held by a new insurer, when two companies in the industry were affected by fraudulent misappropriation of funds in the late 1980s. The laws are even tighter now, too.

If another insurance company takes over my policy can they change the terms I currently have?
NO – they are bound by the terms of an existing pure risk contract, including your current acceptance terms. (At present no insurer guarantees the ongoing premium rate for any group of policies, so it is possible that premium rates across a product type can alter with any insurer. They cannot alter your individual rates, however).

If you have any concerns regarding your insurance contact your financial adviser or give us a call on 1300 766 323.

Please Note:

Mortgage stress and underinsurance

admin — Mon, 08 Sep 2008 02:34:05 +0000

The other day while I was having a reshuffle of some paperwork on my desk, I came across an article showing a breakdown on what causes mortgage stress. With yo-yoing interest rates, mortgage stress is the flavour of the month.

Before your eyes glaze over with boredom, what do you think is the main cause of mortgage stress? Most people are quick to point their finger at the banks, people’s lifestyles and the economy in general. But a report from Genworth Financial, one of Australia’s largest mortgage insurers, found that while rising mortgage repayments did put pressure on the household budget, generally it was a significant lifestyle event that acted as a trigger for a borrower’s inability to meet their debts.

Their research found illness or injury was the biggest cause of hardship, representing 38% of hardship applications in comparison with just 2% of applications because of over commitment to a mortgage.

These interesting statistics lead me to my next favourite topic, underinsurance, where you don’t have enough insurance to protect yourself, your home or your family if a catastrophic event occurs. I have already written about the massive problem of underinsurance in my earlier blog Life Cover – Protect your family from life’s surprises so I won’t revisit the figures in this article. But if you’re curious, have look at my blog as it has some interesting figures about life insurance, or rather the lack of, life insurance in Australia

In any event the article did give me cause to ponder, once again, on why people aren’t taking out life insurance. It might be that people are not sure how personal insurances work or believe it is out of their budget. Maybe people feel intimidated approaching an insurance adviser for advice.

If you think you’re underinsured, the biggest favour you can do for yourself and your family is at least take the first step and contact your financial planner or insurance adviser to allow them to assess your situation. Don’t be shy – whatever your budget, whatever your situation, there is an insurance plan out there that suits you and your family.

If you’re still not convinced that you need insurance to protect your families, consider this. Life insurance isn’t about you, it’s about the people you leave behind who have to pick up the financial pieces after you’re gone. Give us a call on 1300 766 323.

Please Note:

Drug advances save lives but who pays when you can’t?

admin — Thu, 07 Aug 2008 16:08:57 +0000

I was honoured to recently attend Griffith University’s graduation ceremony, which I found to be an impressive example of good planning and organisation. Also impressive was the speech of the national president of the Pharmacy Guild of Australia, Kos Sclavo, who was awarded an honorary Doctor of the University in recognition of his contribution to the pharmacy profession.

His speech was powerful. Not only because of his reference to the death of his 10 year-old son from leukaemia, but because of his recognition of a rapidly changing pharmaceutical world. Doctor Sclavo noted that many of the drugs available today on the Pharmaceutical Benefits Scheme weren’t around when he graduated from university 20 years ago – when he thought he knew everything!

The great outcome for our society is that these pharmaceutical advances are saving lives – but at a cost. Miracle drugs can cure cancer but the treatment can cost patients thousands of dollars for each course. Few people have access to such funds and a patient’s financial difficulties may be further exacerbated by an inability to work while undergoing treatment.

We can’t always prevent misfortune from occurring, but we can take steps to protect the financial well being of our families when hit with the devastating effects of illness or injuries. Investing in trauma insurance will help your family having to avoid admirable but desperate measures such as the recent example of a young son fundraising $70,000 to buy his cancer stricken mum life saving medication.

Last year the insurance industry paid out an average of $8.39 million dollars every day to families experiencing some kind of crisis such as illness or injury. With a third of all Australians expected to suffer a serious illness or injury in their lifetime it makes sense to invest a few dollars each week to protect your family’s quality of life.

Trauma insurance gives us money when we need it most by paying out a lump sum As a result of an accident, on diagnosis of an insurable disease or because of a certain event such as a being placed on a waiting list for an organ transplant. Think of how many people you know who have had heart attacks and cancer and ask yourself the question, when I have my first heart attack do I lose the house or the mortgage?

Please Note:

Income protection for the girls

admin — Tue, 05 Aug 2008 06:08:53 +0000

I read recently about a twenties-something young woman who set up her own accountancy practice, from scratch. After six years of hard slog – working and studying full time – she wanted the challenge of setting up her own business and not taking on somebody else’s client base.

Bright, educated and attractive – funky, goal orientated ladies heading down the path of success are no longer the exception. Females now make up around 60 percent of university graduates.

It’s not just the young ladies who are into getting an education and having a career. One in every 13 single women in the 45 to 49 years old age group is paying off a HECS debt compared with only one in every 100 single men of the same age.

With all this feminine up-skilling, the gap between men and women’s incomes continues to close- and Australia is leading the way with Australian women now earning about 92 percent of male incomes.

It’s great to see women moving ahead in leaps and bounds. But not only are they earning bigger incomes, they are also taking on more debt. In the last decade alone there has been a 50 percent increase in single female home owners. The ladies are thinking ahead and building up their asset base, but they’re not doing enough to protect their income.

Out of all the incomes insured by the insurance industry, less than fifth belonged to the ladies, yet they make up nearly half the workforce. Maybe the industry is a little to blame – in the past it was full of mainly male bean counters, but that’s changing!

The industry has woken up to the potential earning power of the ladies and some now tailor their policies to meet the needs of the ladies. Most insurers now offer a pregnancy pause for those women who plan to include a family in their working lives and premiums can be waived for up to 12 months.

Some insurers can provide options such as grief support, contributions towards financial planning or payment for a family member who stops work to care for the insured if the policy holder becomes incapacitated in any way.

The best way to find a policy that suits you is to talk to an independent female financial planner who is qualified to give insurance advice and create a plan to suit your individual circumstances. We have one, give Cheryl a call on 1300 766 323.

Please Note:

Life Cover – You can never have enough

admin — Tue, 06 May 2008 07:23:12 +0000

Last week a little noticed article appeared in the Courier mail about a private member’s bill being introduced into state parliament covering the removal of tax on certain life insurance products – this is not the main story, because as with all private member’s bills introduced into parliament it will be voted down.

But what the newspaper article said was a statistic that for once I agreed with – that the reason for the introduction of the bill was to make insurance more affordable for the average family – given that only 4% of average families have adequate insurance to meet their needs.

Having never met a widow who complained about having too much life cover and seeing an awful lot of average Australian families every week I can say I wholeheartedly agree with that thought.

I was recently made aware of the statistic that in every hour of every day in our wonderful country that:

31 babies are born;
15 people die; and
47 people are diagnosed with a critical illness.

But I hear you say, it won’t happen to me. Sure it won’t, but look at those dreadful boating tragedies we have seen in the past week, I am pretty sure none of them had planned for the awful events that befell them. (Actually statistically, there is a 100% chance you will die! – you just don’t know when)

As we do not know what is just around the corner, it is up to you to ensure that the emotional turmoil and pain your family will go through when you die or become disabled does not turn into long term financial ruin.

So talk to your financial planner, get him/her to review what you have in place and update where necessary – after all if you don’t want I am sure your family can always turn to welfare, its what you would want isn’t it?

Before making an investment decision, you need to consider (with or without the assistance of an adviser) whether this information is appropriate to your needs, objectives and circumstances. This information is provided for persons in Australia only and is not provided for the use of any person who is in any other country.