Trauma Insurance - It Won't Happen To Me

Trauma insurance pays a lump sum upon diagnosis of a specified range of illnesses including cancer, stroke and heart disease.

The payouts can be very helpful for those who suffer these illnesses to pay down debt or to pay for necessary changes to their houses.

How likely are people to be diagnosed with the illnesses covered by trauma insurance though?

The graphic below outlines some of the statistics.

If you would like a quote on Trauma insurance, please contact your adviser.


Income Protection for Women

Some Insurance companies offer income protection for those working 20 hours per week and above. And with women making up nearly half of the entire Australian workforce, and over half of those being part-time, this is great news.

In 2011, women made up 45 per cent of the Australian workforce with 80 per cent aged 20 to 54. Over half (52 per cent) of those work part-time, usually returning to work after having children or time spent studying.

Today there is an increasing number of dual income households, due to the high living costs associated with servicing debt, meeting childcare fees and maintaining a reasonable lifestyle. In many cases, both partners do not have income protection, with females often foregoing this cover, due to affordability issues.

In such cases, there are various options on offer to help make income protection more affordable, such as:
• waiver of premium when on maternity leave
• options for longer waiting period
• shorter benefit options
• essential Cover - accident-only income protection option - an inexpensive way to insure your income.

Part-time female workers are a major part of Australian society and income protection insurance should be a key part of their financial plan, just as it is for a household’s full-time breadwinner.

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 insurance advice tailored to their specific circumstances prior to making any insurance decisions and should read the relevant Product Disclosure Statement.

Important information: This information was prepared by The Colonial Mutual Life Assurance Society Limited ABN 12 004 021 809 AFSL 235035 (CMLA).


Life Insurance Premiums on the rise - good time to review

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.

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.


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?







A Life Transformed

PUBLISHED: 24 Nov 2011 PRINT EDITION: 24 Nov 2011
Jill Margo
It was a socially awkward moment. Simon Eldridge was standing in a circle of friends at Christmas 2008 when someone made a funny remark. As he laughed, the contents of his mouth sprayed over the woman standing next to him.

Fortunately, it was only water, was easily dealt with and the party continued. But Eldridge stepped back in puzzled embarrassment. He didn’t know he was losing muscle power in his lips and that soon he would have difficulty holding them closed. Nor did he know this was an erratic early sign of an incurable disease that would put him in a wheelchair two years later.

At the time, Eldridge seemed indestructible. He was 44 and in his prime.

The financial markets were in a slump and, as managing director of Credit Suisse’s Australian equities sales trading, he had been staying in Sydney while his wife Sheila and their two sons took their annual break at the family’s holiday house in the Hunter Valley. He commuted on weekends.

When Sheila called him at work, his voice was intermittently slurred and she inquired if he had  been to lunch. He hadn’t. While she put it down to fatigue at the end of a tough year, he said it was odd and his tongue felt heavy.

Gradually, other things began happening. At night, Simon’s left arm began to twitch and cramp. Was it the way he was lying? There were pins and needles in his hand. Thinking his wedding ring might be restricting blood flow, he took it off.

As other symptoms developed, they went to their family doctor, who referred them to a neurologist. By now Sheila had been exploring Google and had narrowed Simon’s condition down to two possibilities; multiple sclerosis or motor neurone disease (MND). She kept this to herself.

In May 2009, when the neurologist said the situation was grave and they should get their affairs in order, Sheila went to water.

She knew what was next but didn’t expect to hear that MND would disable Simon so quickly that he would be unable to work beyond Christmas. There was no cure and he would just grow weaker and weaker. They found their way back to the car, sat inside and wept. Eventually, Simon said: “Well, I guess we can sell the house in the Hunter. We could also sell the wine cellar.

“No way! I am going to need that,” Sheila replied.

They laughed, and rather than facing anyone, went for a quiet walk on Chinaman’s Beach, down from their house in Mosman. Then they turned for home, where Simon called his mother and his sisters while Sheila called the boys’ school to ask the counsellor for advice on how to guide them through this rapidly deteriorating situation.

Later, Simon went to work and told colleagues. Still reeling, his intention was to confront his circumstances as directly as he could. Nothing should be hidden. The Eldridges subsequently received a second opinion from an expert who softened the predictions, put Simon on medication to slow the progression and introduced him to a multi-disciplinary clinic where all aspects of his disease could be managed.

Relieved to have found the best care, and feeling almost upbeat, he and Sheila composed an email to friends and family disclosing their predicament (see below). To cope with what was surely coming, Simon began anti-depressants and has remained on a fairly even keel ever since. He’s engaged in the world and, as it is now an effort for him to speak, he carefully articulates what needs tobe said, conscious that it should be concise and intelligible.

Although difficult to understand, his mind is razor sharp and he is without illusions. He knows his body is declining inexorably. “Knowing where I have come from in the last two years, I have a pretty good handle on the future,” he says.

“On a daily basis the deterioration is very gradual but on a monthly basis is it pretty powerful and I know I am heading to paralysis. Three months ago, I could undo my pants and take them off. Now I can’t.”

“Mentally I am still capable of being an MD of our global investment bank, but physically I can’t do it. My computer chip retains all its memory but I am trapped inside a machine that is corroding.” Simon knows this disease will see him out but also knows some forms of it allow for longevity. The celebrated theoretical physicist, Stephen Hawking, was diagnosed at 21, is soon to turn 70 and is  still working.

The release of the iPad was well-timed for Simon because he can use the touch screen to manage his reading and correspondence, which he gets in abundance. He is genuinely surprised at the ongoing support he is receiving from colleagues. The esteem in which they hold him was reflected in a  celebration in March this year to mark his 30 years in the industry.

His career break came because he was tall for his age, and over the summer holidays the Melbourne stock
exchange was looking for a chalkie tall enough to list the price moves.
Simon, the son of a plumber, applied, got the position and went on to spend 26 years with McNab Clarke, now
Credit Suisse.
For the past 13 years, he has led the Credit Suisse Australian equities desk. For the celebration,  Credit Suisse took the extraordinary step of donating half its brokerage commissions from March 30 to the Eldridge Trust Fund and to nominated MND charities. Other brokers contributed too and $800,000 was raised.

Simon says about $300,000 went to three MND charities and the remainder to a trust fund for his sons and to help him with equipment and carers. He and Sheila made radical changes. First, their large federation family home, with its swimming pool, tennis court and period furniture, was sold with all its contents.

They scaled down to an apartment renovated for optimum wheelchair access. As he would be spending much time there, Simon wanted a large terrace, with a open view of the harbour and Chinaman’s Beach.

Simon traded his convertible for a vehicle that can ferry a wheelchair and he and Sheila continue to make the effort to go out. With his youthfulness and healthy glow, outsiders find it difficult to grasp that his life is slipping from him.

“Initially, I was in a bit of denial, but now I have come to terms with dying from this godforsaken disease,” he says. “My aim is to take as much pleasure out of life as I am capable of. I have to do whatever I can today because tomorrow I may not be capable of it.”

One pleasure is watching Fred, 16, and Henry,14, play sport. “They won’t have me in later life as I had my father and my greatest wish is that their education is assured so they continue to grow into the fine young men they are becoming.”

For Sheila, the only good thing about the experience is that they had time to shed debt and organise their finances. “Simon was finding bits everywhere that I would never have known about.

I used to pay the bills, but I didn’t know where it all came from. We’ve had that luxury of being able to prepare and it has made many of my friends sit up and think about their own situation,” she says. If Simon has one piece of advice, it is “never underestimate life insurance”.

The Australian Financial Review

More to Life Insurance Than Just Selecting the Amount

It 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.