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Archives for Scott Plunkett

How To Protect Your Future

It has often been said that the difference between success and failure is having a plan in place.  As with many things in life, the earlier you get started on your plan, the more successful the future outcome will be.  This is particularly true with regards to building and protecting your wealth.  A vital aspect of long term financial planning regularly overlooked is the importance of obtaining adequate personal risk protection cover.

Adequate risk protection cover such as Death, Total & Permanent Disability, Trauma and Income Protection provides a foundation onto which you will build the structure for your accumulation of wealth into the future.

Now that the new financial year has ticked over again, it may be the time to ensure you have sufficient protection in place as a contingency plan for anything that may happen in the future.  A wealth protection strategy will reduce the risk of you and your family not achieving your financial goals.

Starting out in life, you may have very little in savings and debts to manage.  If a family comes along, you should also consider how you will provide for your family and clear your debts if the unexpected occurs, particularly if you rely on one income.

Taking out cover while you are young and healthy will pay off in the long run.  If you purchase cover earlier in life, you will have access to lower premiums and you are less likely to have your cover restricted due to health conditions which are more prevalent as we get older.

Relying on your default cover via your superannuation to provide comprehensive protection for your specific needs is an all too common trap which should be avoided.  You may have an automatic level of cover on joining your fund, and this will rarely provide the benefits required to pay off the average mortgage, and cover future expenses for your partner and/or kids if you die, or stop working because of an accident or illness.

A long term strategy to consider is obtaining cover under Level premiums, instead of the more popular and initially cheaper option of Stepped premiums.  Stepped premiums will increase annually based on the higher probability of you claiming as you get older.  Unfortunately, many people with stepped premium protection in their later years, have to reduce or consider cancelling their cover, due to premium increases at the time when they may need it most.

A Level premium will ‘future proof’ your wealth protection as the premium will increase annually based on CPI, rather than increasing age risk factors.  When you are older, you will be able to maintain your cover as the premium has been averaged over the life of the policy.  On face value, stepped premiums appear to be the cheaper option when you are young, but Level premiums provide the longer term security to hold your valuable cover into the future.

Remember, sometimes more is lost by inaction, rather than action.  Plan for the future today so you don’t regret your inaction tomorrow.

This advice is prepared as general advice only, not taking into account your personal objectives, financial situation or needs. Please consider the appropriateness of the advice in light of your objective, financial situation and needs before following the advice. If you would like to know more and/or to hear about whether the above advice would apply to you, please contact one of our insurance advisers today.

 

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Hazards Of The Holiday Handyman

With the increasing popularity of DIY home improvements and gardening makeovers, there has also been a surge in the number of injuries due to falls from ladders, misuse of equipment and inexperience with power tools.

Long weekends and holiday periods see a rise in accidents as people seize the opportunity to complete that project that has been put aside due to other priorities.  Hospitals and medical clinics experience an increased number of emergency visits and admissions due to serious injuries from incorrect handling of machinery and lack of proper safety precautions.

According to data collected in 2013 by the Monash University Accident Research Centre, falls from ladders whilst doing roof repairs, cleaning gutters and pruning trees, accounted for most around-the-home injuries.  Head, neck, eye and limb damage caused by power tools also represented a large proportion of DIY related injuries.

The statistics show that the most common machinery related injuries were caused by chainsaws, circular saws, lawn mowers, nail guns and grinders.

Contributing factors for the accidents were removing safety measures, disregarding safety instructions, lack of protective equipment and consumption of alcohol.

Due to the popularity of TV shows like House Rules, The Block and Better Homes and Gardens, along with the widespread use of Google and YouTube tutorials, people are often more likely to try to do it themselves, whereas previously we’d get a tradesperson to do the job.

DIY has become more commonplace as people have seen it done on TV, and decide, “I can do that!”  Many will attempt to complete projects around the home to try to save money.  It can often be difficult to find a professional to do the job who is not booked out, on holidays, or can do the job cheaply.

Access to cheap off-the-shelf power tools and other equipment, without proper training, equipment or sufficient information, can also prove hazardous.

Statistics:

Up to 75% – of DIY injuries occur around the home while undertaking maintenance, gardening or vehicle repairs.

Top 3 – DIY activities that result in injury are grinding, lawn mowing and ladder use.

Homegrown – Evidence suggests that home injuries result in more lost days from work than workplace injuries.

5:1 – The ratio of men more likely to be injured undertaking DIY tasks than women. Adults aged 25-34 are in the highest risk group. Women are most often injured in gardening activities. Men are most often injured in non-gardening activities such as grinding, welding and motor vehicle maintenance.

Just remember, sometimes more is lost by inaction, rather than action.  Plan for the future today so you don’t regret your inaction tomorrow. Contact The Investment Collective to learn more about planning for your future.

 

 

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Is Your Income Protected?

With Australian household debt to income ratios at record highs, it is vital to ensure that you have adequate personal risk protection cover in place to provide security for your home loan.  It is also critically important to consider your cover needs if another family member has provided a guarantee to assist you in obtaining the loan.

Unfortunately, in the excitement of buying a home, very few prospective or existing borrowers consider the consequences of not being able to work due to sickness or accident, or the financial impact of death, particularly with loans held jointly with a spouse, or with an additional guarantor.

Loss of income in the event of disability, even for a short period, will place stress on the ability to meet mortgage and/or personal loan repayments, and day to day living expenses.  Without adequate Income Protection cover, you will erode savings, and risk falling behind in your mortgage payments.  If you default on your loan, the bank may commence legal proceedings to repossess your home or pursue a guarantor to seek payment of the liability.

In the event of the death of a borrower, the person who inherits the home, or is a surviving joint tenant will be responsible for the debt.  If the property owner was a sole borrower, the bank may request the payment of the outstanding loan amount.  If there is a shortfall in the sale price versus the loan amount, the bank may sue the beneficiary to recoup the balance of the loan.  Without adequate death cover in place, you may be putting your surviving family at risk!

Many homeowners falsely believe that they will have adequate protection via the default cover offered through their superannuation fund if they are temporarily unable to work, suffer permanent disability, or death.  Unfortunately, there is often a huge discrepancy between the amount owing on the average mortgage, and the cover held via super.

It is crucial to understand that the Death/Total and Permanent cover offered via many funds is unit based, and will decrease significantly as you get older.  The rate at which the cover reduces during your working life is typically much faster than the rate at which a mortgage is paid off!

The Income Protection cover offered by many superannuation funds may only offer a minimal benefit for a maximum period of 2 years, which in many cases will not cover mortgage payments in addition to other costs of living.  In the event of claiming on your Income Protection held via super, the benefit may be reduced based on your pre-disability earnings, and other offset provisions.

Some facts to consider in relation to covering your debts:

  • For every home destroyed by fire, 3 are forced to be sold due to death, and 48 are forced to be sold due to disablement.
  • 1 in 6 men and 1 in 4 women are expected to suffer a disability between the ages of 35 to 65 that causes a loss of 6 months or more off work.
  • 2 out of 5 Australians will suffer a critical illness such as Cancer, Heart attack or stroke before they reach 65.

Here at The Investment Collective, we have friendly advisers who specialise in risk insurance. If you would like to review your personal cover requirements contact us today.

Please note: The information provided in this article is general advice only. It has been prepared without taking into account any person’s individual objectives, financial situation or needs. Before acting on anything in this article you should consider its appropriateness to you, having regard to your objectives, financial situation and needs.

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