Australia has had its fair share of disasters over the last few years – drought, bushfires and floods – that have ramped up the volume of insurance claims. Most people would assume that if and when they need to claim on their insurance, the insurance payout covers the damage and is not income assessed for tax purposes – but this is not always the case.
Insurance is all about protecting what you have now and what you need to have in the event of the unexpected. As you travel through life, the protection you need is likely to change. The key to selecting the right insurance is understanding your present needs and making sure you have both the right sort and level of cover.
Recently a client came in to complete their tax returns and during the process we found that the income protection insurance they wanted to claim was actually paid for by their Super Fund. This sparked an interesting discussion about how income protection deductions work and how claims would be processed.
Would you go out for a coffee and leave $10,000 on the table because you forgot? Of course you wouldn’t, and if you did, you would go back and get it! Then why are so many of us losing track of our superannuation accounts and potential insurance that they usually carry?
Estate planning is not just about making a will. It’s about deciding how you want to be looked after (both medically and financially) if you can’t make your own decisions later in life. It’s also about documenting how you want your assets to be distributed after you die
Here’s a confronting question: What would you do if the main breadwinner in your household could no longer bring in an income? Do you have a Plan B? Most people don’t. That’s where insurance comes in.
When it comes to arranging insurance it's important to decide what types of insurance are available to you and what you'll need for your particular life circumstances. From here you'll need to consider whether you should keep it inside your super fund or set it up separately.