A staggering 20% of Australian families will be affected by the death of a working age parent, or a serious accident or illness that leaves a household member unable to work¹

Insurance to protect you and your family is particularly important. Did you know that less than a third of Australian families have Income Protection or Total and Permanent Disability (TPD) insurance2.

When tragedy strikes or unforeseen circumstances take hold, the last thing you want to be concerned about is money. Having enough cover means you don’t have to worry and you can feel reassured your family’s future is secure.

A clever way to insure

Buying your insurance through your super fund makes good financial sense, as you may be able to take advantage of a range of tax concessions generally not available when insuring outside super.
For example, if you’re an employee and are eligible to make salary sacrifice contributions you may be able to buy insurance through a super fund with pre-tax dollars.

These concessions can make it cheaper3 to insure through super, or help you get a level of cover that may not otherwise have been affordable.

Alternatively, super can make insurance more affordable if you don’t have sufficient cash-flow to fund the premiums.

Instead of making additional contributions to cover the cost of the insurance, you can arrange to have the premiums deducted from your existing account balance.

Without insurance, if something unforeseen should happen your family’s savings could run out quicker than you expect and you might face financial difficulty long before you intend retiring.

Of course, everyone’s situation and requirements are different, so for a review of your personal circumstances, please contact TOPS on 07 3871 1671.

1. The NATSEM/Lifewise Underinsurance Report, National Centre for Social and Economic Modelling, Feb 2010.

2. FSC formerly known as  IFSA, Securing Australians Financial Wellbeing, 2007.

3. This will usually also be the case if the sum insured is increased to make a provision for any lump sum tax that may be payable on TPD and death benefits in certain circumstances.

4. It’s important that you don’t erode your super balance as a result of having premiums deducted from super. This can be prevented by ensuring sufficient contributions are made to cover premium deductions.

The Coalition Government’s second Federal Budget proposed some important changes, particularly for families, retirees and small business owners.

An Extract from the Federal Budget Analysis prepared by GWM Adviser Services Limited appears below.

Summary

• Many lower income young families will benefit from greater childcare subsidies
• Families choosing not to vaccinate their children will miss out on childcare subsidies and family benefits
• Pension assets test changes will benefit lower net worth retirees, however, higher net worth retirees may receive reduced entitlements
• It will no longer be possible to claim both the full Government and employer provided parental leave payments
• The company tax rate for eligible small businesses will be reduced by 1.5%
• Unincorporated small businesses will receive a 5% tax discount
• Small businesses will be able to fully deduct capital expenses of up to $20,000 per annum
• Farmers’ capital expenditure on fencing and water facilities will be fully deductible

If you have any questions on the Budget and how it may affect you please contact please contact TOPS on 07 3871 1671.

Note: The measures outlined in this Federal Budget Summary are proposals only and may or may not be made law.

From 1 January 2015 the rules that deal with the treatment of income that are being paid from super pensions has changed. So what does that mean for you?

Before the changes

Until the start of this year, super pensions were exempt from the standard rules- called deeming rules – for financial investments such as shares and bank accounts. These deeming rules assume your financial assets are earning a certain amount of income, regardless of the income they actually earn. What this exemption often meant was that only a small amount of income that was drawn (if any) was assessed against your Centrelink Age Pension. And that many people optimised their entitlements by investing in these non-deemed investments.

After the changes

From 1 January 2015, the exemption will no longer apply to new account based income streams. All your financial assets will be assessed by Centrelink under the deeming rules when determining your pension, benefit or allowance payments.

For advice about how the new rules may personally affect your financial position, consider making an appointment with us.