Consumers can expect double digit percentage increases in their Life Insurance and Income Protection premiums over the next few years.

Insurance company TAL recently said in a statement to the media that the last few years has seen a much higher incidence of claims which has put severe pressure on insurance company profitability.  This can be seen in the charts below which were sourced from actuaries Rice Warner.

Insurance Premiums likely to rise

It was also revealed recently that the Media Super fund had increased insurance premiums by 45%.

Life Insurance and Income Protection is a highly competitive industry and we recommend that given the likelihood of premium increases, consumers would be well advised to seek help from an insurance specialist (offered by GEM Capital).  An insurance specialist can access insurance policies from many different insurance companies to obtain the best possible outcome for each individual.

This material has been provided for general information purposes and must not be construed as investment advice. This material has been prepared without taking into account the investment objectives, financial situation or particular needs of any particular person. Investors should consider obtaining professional investment advice tailored to their specific circumstances prior to making any investment decisions and should read the relevant Product Disclosure Statement.


Published in Life Insurance
Wednesday, 28 November 2012 13:57

Life Insurance for young families

Young family having a baby

New priorities and responsibilities

As a 'young family' you have a natural instinct to care, nurture and protect those you are now responsible for. It isn’t just about you anymore, it is about your responsibilities and knowing that your family is secure in your care. You are thinking about the things you are currently providing but, more importantly, you are already planning for the future-such as education for your children; a safe and comfortable home; and family holidays and recreational activities.

As with all life stages, you like to think that you will always be there for your family, and be able to work and provide a steady income. There is nothing stronger or more compelling than the natural instinct of a parent wanting to ‎protect their family.

Why you need life insurance to protect your family

No one plans to get sick, injured or to die unexpectedly and we all have a tendency to think that it won’t happen to us. ‘I’m too young to get cancer or have a heart attack’ and ‘I’m the safest driver on the road,’ are common misconceptions.

The first step in addressing your family’s financial security is to become aware of the risks you and your family are exposed to. One of the greatest risks you may face in your life is losing your ability to earn an income and to provide a secure and comfortable lifestyle and future for your family. Despite this being the case, many people don’t insure themselves for this risk, whilst almost everyone insures their car!

It’s worth taking a moment to consider what would happen if an extended illness or injury or premature death stopped your ability to work and provide an income. This could have a devastating impact to your family’s financial security and long-term lifestyle choices. It’s hard to imagine losing your health and your ability to go to work or even losing your life, but it is easy to imagine the practical impact the lack of an income would have.

The perfect time to put in place a life insurance plan

It is so important to consider your life insurance needs while you are relatively young and healthy, before you have any health scares and while there are still a range of options available to you. Too many people only realise the need for life insurance once they begin to experience health problems and it is often too late.

Published in Investment Advice
Wednesday, 03 October 2012 11:52

To My Dear Dead Husband Tom........

To My Dead Husband Tom,

Why were you so against insurance? You always chuckled and laughed that you would never die and I would just remarry. Well guess what? You died one year later! It’s now two years later, all our money is gone and I have some real physical and mental challenges.

I am left with our daughter Susan, NO HOME, working two jobs, and bills coming from everywhere.  The doctor bills for your heart attack alone were in excess of $90,000.

The fun and laughter is now gone and we are really hurting! When I really think about it, I believe I am as much to blame as you are. I should have opened my mind and imagined the alternative picture that my Financial Planner was painting. Instead I chose to laugh about it and assumed it would never happen to us.

The joke is on me! I am not remarried and most likely will not get married ever again. When someone dies it is amazing the sorrow and pain that comes to the surface.

I want to let you know that I now have a policy on myself, and I make sure it is the first bill paid. If something ever happens to me, I want Susan to be protected. You know what kills me the most? For approximately  $650 a year, we could have been protected.


Published in Investment Advice
Monday, 27 August 2012 10:44

Financial Planning and Family Risk

There is an important aspect to Financial Planning we would like to highlight which is the potential risk associated with an illness, injury, or major trauma event occurring to a member in your family ie a son, daughter, their spouse or a grandchild.

If the unthinkable happened and one of your family members was to suffer from any of these events, would they survive financially, or would you need to step in and offer financial support?
We think it is important that you be honest and ask yourself two questions.
  1. Would you step in and help out your family in the event that one of your children, their spouses or your grandchildren were to suffer a serious illness or injury.  We know the importance of family and think in most cases the answer would be yes.
  2. How would you feel if when you found out they had no or insufficient insurance cover to provide for their would the rest of your family feel?

The financial consequences for you could be a burden too great to bear and drastically affect your future plans and other family members.

Many parents know little or nothing of their extended family’s real financial position, this extends to not knowing how much debt they hold and ongoing financial commitments they have.  In addition, most parents rarely know what insurance cover they have in place and if this is sufficient to meet the circumstance.

This is not unusual as they are adults now and responsible for their own life BUT, if something did happen and only then did you find out, you would potential have to suffer the financial consequences.  This is what we call Family Risk as it affects all members of the family.

We provide a financial planning service to the adult children of our clients.  We would be happy to have a discussion with you about your family and how we could provide this service to them.

Published in Investment Advice
Friday, 22 June 2012 15:59

What is your most Important Asset?

Most people readily accept the value of insuring their car and their house but do not insure their most valuable asset which is their ability to earn an income.


Below is a table about insurance and claims history designed to provide food for thought about what really is your most important asset.  This table highlights that the take-up rate for car insurance is 71% but only a 6% take-up rate of income protection.  The grey bars show the average claim size.  (you will need to increase the size of the table below)


Did you know that a car is stolen every 10 minutes in Australia and that someone is burgled every 2 minutes.  Also 1 in 6 men and 1 in 4 women are expected to suffer a disability from the age of 35 to 65 that causes a loss of six months or more from work.


When you think about it - how would you pay for your car insurance if you didn't have an income?







Published in Life Insurance

Investment review meetingIt is important not only to select the appropriate amount of life insurance for your situation, but to own it in a way that will ensure that the proceeds of the insurance are paid in accordance with your wishes.

The Australian Financial Review recently reported that around a thrid of complaints made to the Superannuation Complaints Tribunal relate to a dispute about who death benefits are paid to.

This article will examine three different ways of owning an insurance policy for a typical family and highlight issues with each of the forms of ownership.

Our typical family is Adam and Tania who are married and have a son called Brad who is aged 5.  Adam has been married previously and has a son from that earlier marriage called Toby who is 10.  Adam’s ex-wife despises Tania and the feeling is mutual.

Adam and Tania do not have a will.  We will only examine the position for Adam’s life insurance in this article for simplicity.  Adam has determined that he should insure himself for $750,000 so that their mortgage of $250,000 is repaid which leaves $500,000 to generate a $30,000pa income for Tania.

The table below outlines 3 various ways of owning the insurance, and issues associated with each method of ownership. (note this is not  an exhaustive list of ways of owning insurance policies)


Life Insurance Ownership Method Issues that Tania may face upon Adam’s death
Adam takes out $750,000 of life insurance through his personal superannuation fund (or industry fund) and makes a standard death benefit nomination intending to leave his benefits to Tania A standard death benefit nomination doesn’t guarantee that the trustee of the super fund will pay the benefit to the nominated beneficiary.  The trustee of the fund has discretion about who to pay the death benefit to.  The trustee would consider that Adam died without a will and that he has 2 children to consider.


Under laws of intestacy (when someone dies without a will) in South Australia, the first $100,000 plus 50% of the estate is paid to the spouse and the remaining amount to any minor children.  This means that Tania is unlikely to receive the full insurance amount and may at best receive $425,000 with the balance probably split between each of Adam’s children.  This would only leave Tania with $175,000 after repaying the mortgage.


Adam purchases a $750,000 term life insurance policy outside of the superannuation system where Adam is the policy owner and the life insured Upon Adam’s death, this insurance policy would become part of Adam’s estate and subject to the terms of his will.  As Adam has died without a will, the policy would be subject to the laws of intestacy.


This means that in South Australia the first $100,000 and 50% of the remaining estate would be paid to Tania and the remaining amount divided between Brad and Toby.


Tania would be left with $175,000 after repaying the mortgage.


Adam purchases a $750,000 life insurance policy and the owners of the policy are Tania and Adam jointly.  Adam is the life insured on the policy. As the insurance policy is owned as joint tenants – under survivorship rules upon the death of Adam, the policy owner reverts solely to Tania.


This means that Tania would directly receive the $750,000 death benefit, bypassing Adam’s estate.


No provision in this solution for Toby.


The purpose of this article is not to provide a definitive solution to Adam and Tania’s insurance needs, but to highlight that the outcomes from different ownership methods can be massive.

No two family circumstances are the same, and while there may be similarities, everyone’s situation is different.  With this in mind we make the assertion that life insurance solutions must reflect this fact and that there is not a one size fits all approach to ownership of life insurance.

We strongly advocate that you discuss not just the amount of life insurance you should have with your adviser, but how it should be owned to fit in with your specific family circumstances.  For those who already have insurance in place, now might be a good time to ensure that your life insurance ownership is right for your situation.



This information is of a general nature only and neither represents nor is intended to be personal advice on any particular matter. We strongly suggest that no person should act specifically on the basis of the information contained herein, but should obtain appropriate professional advice based upon their own personal circumstances including personal financial advice from a licensed financial adviser and legal advice. RI Advice Group Pty Limited ABN 23 001 774 125  AFSL 238 429.


Published in Life Insurance