Ask An Adviser: Phil Thompson - You'll never think about insurance the same
Mar 4, 2024
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Learn about the importance of insurance from specialist Phil Thompson. Explore different types of personal insurance and how to optimize coverage. Understand the impact of super funds on insurance options. Discover the significance of income protection and life insurance policies at different life stages.
Income protection is crucial for financial stability during difficult times and plays a vital role in achieving financial goals.
Individuals should assess if insurance through super funds meets their unique needs or consider supplementing it with policies managed by financial advisors for greater flexibility and coverage.
Deep dives
Understanding Personal Insurance Types
There are four main types of personal insurance discussed in the podcast: life insurance, total and permanent disablement (TPD) cover, income protection, and trauma insurance. Life insurance provides a lump sum payment if the insured individual passes away, while TPD cover offers a lump sum if the person becomes severely disabled. Income protection provides a monthly salary if the insured cannot work due to illness or injury. Trauma insurance covers serious medical events like cancer, heart attacks, MS, or Parkinson's.
Underappreciated Importance of Income Protection
Income protection is highlighted as the most underinsured policy among Australians. Many rely on their super funds for insurance coverage, assuming it's sufficient. However, income protection is crucial as it pays a percentage of your income if you are unable to work, ensuring financial stability during difficult times. Despite underestimation, income protection plays a vital role in achieving financial goals and safeguarding against unforeseen circumstances.
Navigating Insurance through Super Funds
Within super funds, life, disability, and income protection insurances are commonly set up automatically but may not always offer adequate coverage. Super funds cannot provide trauma insurance, and the default coverage levels are often limited. While it's convenient to have insurance through super, individuals should assess if it meets their unique needs or consider supplementing it with policies managed by financial advisors for greater flexibility and coverage.
Differences in Tax Benefits and Premium Costs
The discussion delves into the tax implications of insurance policies, particularly income protection being tax-deductible. The comparison between obtaining insurance through super funds versus external providers reveals potential cost disparities and tax advantages. By seeking advice from financial advisors, individuals can explore options for maximizing tax benefits, ensuring adequate coverage, and potentially reducing premium costs for enhanced financial security.
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In the spirit of reconciliation, Equity Mates Media and the hosts of Equity Mates Investing acknowledge the Traditional Custodians of country throughout Australia and their connections to land, sea and community. We pay our respects to their elders past and present and extend that respect to all Aboriginal and Torres Strait Islander people today.
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This podcast is intended for education and entertainment purposes. Any advice is general advice only, and has not taken into account your personal financial circumstances, needs or objectives.
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