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Life Insurance with JHFP

Life insurance is an integral part of the financial planning process and is the foundation to helping you achieve your financial goals.

Its purpose in the financial planning process is to protect what you have already achieved as well as your future financial objectives.

For most working families their prized possession is their ability to earn an income. Without that, the ability to pay the mortgage, aspire for holidays, new and improved toys and a generally enjoyable lifestyle are such harder to obtain.

As an example, a 35 year old, on an annual income of $50,000, retiring at age 60, has the earning capacity of $1.25 million. This quick example does not include wage increases over the persons’ life.

When considering life insurance in a financial planning context, the main use of it is to protect your unearned future income.

There are four distinct policy types that fit within the life insurance banner.

Life Insurance – pays a lump sum to the insured’s nominated beneficiary or estate in the event of the insured’s death. The purpose of holding the insurance may be for all or any of the following:

  • To repay debts;

  • To provide for children’s future education expenses;

  • To provide the un-earned income to the remaining family members of the deceased;

  • To provide additional monies that can be used towards other expenses at the discretion of the insured and beneficiaries.

Total and Permanent Disablement – pays a lump sum to the insured or their beneficiary in the event that the insured is permanently unable to work in an occupation that they have relevant experience or training in, due to sickness or injury. The purpose of holding this insurance may be for the same reasons as per death cover plus all or any of the following:

  • To cover the cost of refurbishments to the home so the insured is able to live in the home comfortably. This may include the installation of ramps, rails, handles etc;

  • To cover the cost of assistance in running the home, be it costs for gardening, cleaning, personal care, taxi’s, preparing meals;

Income Protection – Pays a regular monthly benefit to the insured, as a replacement for income that the insured is unable to earn, due to sickness or accident. Premiums are tax deductible. Apart from winning the X Lotto, a working family will always need Income Protection Insurance for its breadwinners.

The three above insurance policies can be owned inside or outside of superannuation and there are pros and cons of both. Professional advice can help you to structure your policies appropriately by holding policies both inside and outside of superannuation environments.

Critical Illness – Pays a lump sum to the insured or their beneficiary if the insured suffers a medical condition as per the policy definitions defined within the policy document of the insurance Product Disclosure Statement. Critical Illness insurance pays a lump sum in the event of a certain event which can help with the recovery and costs associated with the recovery.

As an example, the financial hardship placed on cancer sufferers can be quite severe as there are many out of pocket medical expenses to pay for. Critical Illness helps pay for these costs which in turn, helps relieves the mental stress of the recovery.

Please call the office on 08 8186 3589 or use our contact form should you wish to discuss your insurance needs further.

Any advice provided in this publication should be considered General Advice as it does not take into account your personal needs and objectives or your financial circumstances.

You should therefore consider these matters yourself before deciding whether the advice is appropriate for you and whether you should act upon it.