Life Insurances

Life Insurance provides a lump sum payment when you die or if you’re diagnosed with a Terminal Illness. Your family can use that payment however they choose: for day-to- day living expenses or mortgage repayments, to cover your kids’ school fees or to provide security for your partner’s retirement.

Life insurance can be a cost-effective and convenient way to ensure your dependants can maintain their living standard if you die.

If you have a financially dependent family and pass away, the emotional strain can be quickly compounded by financial strain if you haven’t made suitable plans to help protect their financial future.

Without the ongoing income you earn from working, your family could struggle to cover the mortgage, pay their living expenses and meet a range of other costs.

By taking out life insurance, you can generally ensure a suitable sum of money becomes available for your family upon your death to help meet their immediate and future financial needs, and achieve your estate planning objectives.

How much cover do you need?

The amount of life insurance you may need to achieve your estate planning objectives will depend on your circumstances and what you want to achieve. Some key issues to consider include:

• How much of your income would your family need if you are no longer able to provide for them?
• How long would you like the income to be paid for?
• Would you like your mortgage or other debts to be paid off?
• Would you like to leave an inheritance for your children?
• Are there any costs that would need to be met, such as funeral expenses?
• What investment assets would be available to help meet these needs?

Your Financial Planner can take into account all these issues and help you identify how much life insurance is right for you and your family.

Policy ownership options:

You can take out the cover in your own name or in your super fund. Each option has some distinct benefits and key issues to consider.

Ownership via Superannuation

It may be more cost-effective to hold life insurance in super rather than your own name. For example, in the 2020 financial year:

• if you’re eligible to make salary sacrifice contributions, you may be able to purchase insurance in a super fund with pre-tax dollars
• if you make personal super contributions, you may be able to claim the contributions as a tax deduction – regardless of whether they are used in the fund to purchase investments or insurance, and
• if you earn less than $57,016 p.a. and you make personal after-tax super contributions, you may be eligible to receive a Government co-contribution of up to $500 that could help you cover the cost of future insurance premiums.

These concessions may make it more cost-effective to insure through super, or help you get a level of cover that might otherwise not have been affordable.

Another benefit of insuring in super is that you can usually arrange for the premiums to be deducted from your account balance without making additional contributions to cover the cost.

This can make insurance affordable if you don’t have sufficient cashflow to pay the premiums outside super. The trade-off, however, is that you will use up some of your superannuation savings that could otherwise meet your living expenses in retirement.

Also, there are restrictions on who you can nominate to receive your super in the event of your death (including the proceeds of life insurance held in super) and tax may also be payable by certain beneficiaries on the proceeds. It is important to consider these issues when determining the most appropriate way to own any life insurance policies.

Personal ownership

While insuring in super may be more affordable, if you take out life insurance on your own life, outside super, you can generally nominate a beneficiary to receive the policy proceeds without restriction.

You could nominate another individual as the beneficiary, where the payment would be made directly to them in the event of your death. Alternatively, you can arrange for the payment to be made to your estate by either nominating the estate as the beneficiary of the policy, or not nominating an owner or beneficiary. In this case, the life insurance proceeds will be distributed in accordance with the provisions in your Will, or the laws of intestacy if you pass away without an appropriate and valid Will.

It may also be possible for your desired beneficiary to be the owner of the life insurance policy, where they could directly receive the proceeds in the event of your death, without making a beneficiary nomination.

What happens if I need to make a claim?

If you need to make a claim, our commitment is to ensure we make a real difference at a difficult time. You’ll have a dedicated case manager who’ll work with you throughout the claim, taking the time to get to know you and understand your needs. Their focus is helping you through your claim as quickly and easily as possible.

At Rich River Wealth we are also committed to:

• Helping you understand what happens during a claim and explaining things in everyday language
• Providing practical solutions that support your circumstances
• Doing as much as possible over the phone and keeping paperwork to a minimum.

Stepped or level premium?

Depending on your goals and financial plans, there are different ways to structure your premium payments. Stepped premiums are cheaper initially, and increase as you get older. Level premiums are higher initially and are guaranteed not to increase until you turn 65 or 70. Exceptions apply for increases due to any tax, duty or charge or changes introduced by government.

Inside or outside of Super?

Some restrictions apply around holding Life Insurance inside super, so check with your adviser about what approach is best for you.

How Rich River Wealth can help:

Total and Permanent Disability (TPD) Insurance provides a lump sum payment if you become totally and permanently disabled due to sickness or injury, and are unable to work again. You can use a TPD payment however you wish:

• for medical services and treatments
• ongoing care at home
• or to cover living costs and household expenses so you can focus on your health

Disability definitions

TPD cover includes different definitions of disability, based on the types of activities you’re able to undertake. You and your adviser can choose which definition is most suited to your situation and eligibility:

Any Occupation

– If your disablement means you’re no longer able to work in any occupation that you might be suited to based on your previous education, training or experience.

Own Occupation

– If your disablement means you’re no longer able to work in your own occupation: the one you were doing immediately prior to your disablement.

Activities of Daily Living

– If your disablement means you’re no longer able to perform activities that are part of daily life, like showering.

Policy options:

Standalone or linked
If you take out and link TPD and Life insurances, TPD claim payment will also reduce your Life cover amount. Standalone cover means a claim won’t impact the amount of any other cover you hold.

Stepped or level
Depending on your goals and financial plans, there are different ways to structure your premiums. Stepped premiums are cheaper initially, and increase as you get older. Level premiums are higher initially but remain based on the age you were when you took out cover.

Inside or outside of super
Some restrictions apply around holding TPD Insurance inside super, so check with your adviser about what approach is best for you.

Having cover within super
Super link TPD can be a tax- effective way of structuring your insurance. It allows you to hold some of your cover within super, so you can fund part of your premiums using your super balance or super contributions (which may be tax-deductible).

What happens if I need to make a claim?

If you need to make a claim, our commitment is to ensure we make a real difference at a difficult time. You’ll have a dedicated case manager who’ll work with you throughout the claim, taking the time to get to know you and understand your needs. Their focus is helping you through your claim as quickly and easily as possible.

At Rich River Wealth we are also committed to:

• Helping you understand what happens during a claim and explaining things in everyday language
• Providing practical solutions that support your circumstances
• Doing as much as possible over the phone and keeping paperwork to a minimum.

How Rich River Wealth can help:

Critical Illness insurance provides a lump sum payment if you suffer one of a range of serious illnesses listed in your policy, such as a Heart Attack. You can find a full list of the many conditions that are covered in the PDS and Policy Document, as well as information about the level of seriousness the illness needs to meet in order for a benefit to be paid.

You can use a Critical Illness payment however you wish: for medical services and treatments, for support or ongoing care at home, or to cover living costs and household expenses so you can focus on your health.

Critical Illness cover has been designed to help you focus wholly on your recovery, offering security and support following a serious illness diagnosis or heal.

Policy options:

Standalone or linked
If you take out and link Critical Illness and Life insurances, a Critical Illness claim payment will also reduce your Life cover amount. Standalone cover means a claim won’t impact the amount of any other cover you hold.

Stepped or level
Depending on your goals and financial plans there are different ways to structure your premiums. Stepped premiums are cheaper initially, and increase as you get older. Level premiums are higher initially but remain based on the age you were when you took out cover.

What happens if I need to make a claim?

If you need to make a claim, our commitment is to ensure we make a real difference at a difficult time. You’ll have a dedicated case manager who’ll work with you throughout the claim, taking the time to get to know you and understand your needs. Their focus is helping you through your claim as quickly and easily as possible.

At Rich River Wealth we are also committed to:

• Helping you understand what happens during a claim and explaining things in everyday language
• Providing practical solutions that support your circumstances
• Doing as much as possible over the phone and keeping paperwork to a minimum.

How Rich River Wealth can help:

Income Protection provides a monthly payment if you’re unable to work due to an illness or injury. You can use the payments however you wish: to cover living costs and household expenses like mortgage repayments, groceries and utility bills, to support your family (school fees, for instance) or for rehabilitation services to help you get back to work as soon as possible.

Policy options:

The waiting period
During the waiting period, you can be either totally or partially disabled and, if you’re able to keep working part-time, your waiting period won’t be affected.

Having cover within super
You can have your IP cover inside super, which means you pay premiums through your superannuation account. Some restrictions to benefits do apply, talk with your adviser about what’s best for you.

Standard, Premier or Super
Income Protection is available at three different levels, Each with their own particular features. Your adviser can talk you through the options and help you decide which is right for your situation.

Stepped or level
Depending on your goals and financial plans there are different ways to structure your premiums. Stepped premiums are cheaper initially, and increase as you get older. Level premiums are higher initially but remain based on the age you were when you took out cover.

Inside or outside of super
Some restrictions apply around holding Income Protection inside super, so check with your adviser about which approach is best for you.

What happens if I need to make a claim?

If you need to make a claim, our commitment is to ensure we make a real difference at a difficult time. You’ll have a dedicated case manager who’ll work with you throughout the claim, taking the time to get to know you and understand your needs. Their focus is helping you through your claim as quickly and easily as possible.

At Rich River Wealth we are also committed to:

• Helping you understand what happens during a claim and explaining things in everyday language
• Providing practical solutions that support your circumstances
• Doing as much as possible over the phone and keeping paperwork to a minimum.

How Rich River Wealth can help: