LIFE INSURANCE

Insurance is a flexible and useful tool that can be adapted to suit the different stages of your life. In establishing the level of insurance you require you should consider your financial goals for the short term and the long term.

If you have, for example, a young family and a mortgage, it's comforting to be able to ensure things would be taken care of if something happened to you. Life Cover could clear the mortgage and provide enough money to help educate your children. Life Insurance is one of the only ways to create financial comfort for your family in the event of your untimely death.

Similarly, if you have a business, many people may be depending on you and you may want to make sure that what you have built up over the years, is not lost. A properly funded Business Succession plan will ensure the money is available to satisfy all equity issues of removing your family from the business. In addition to this it will satisfy your business partners that they are looked after as well.

Life Insurance as a Tax Deduction Life Insurace can be taken out as a stand alone superannaution policy, which if you are self employed will be 100% TAX DEDUCTIBLE FOR THE PREMIUM PAID ON A YEARLY BASIS. It can form part of your Superannaution Guarantee Contributions there by helping with your business cashflow.

Food for Thought From the Australian office of the Australian Government Actuary

The Australian Life Tables 1985 - 87

Out of a 100 men aged 30 - 40 14 will not live to retire at 65
Out of a 100 women aged 30 - 40 9 will not live to retire at age 65
Out of a 100 men aged 45 13 will not live to retire at 65
Out of a 100 women aged 45 8 will not live to retire at 65


Some Key Features of Life Insurance

  • Living benefits
  • Guaranteed renewable
  • Double accident benefits
  • Automatic indexation

Superannuation Check your superannuation fund, alot of people are unaware that their fund carries with it life insurance. The level of cover is usually not enough, although it's certainly one of the cheapest ways to receive Life Insurance. The reason for this, being that a Super fund can organise insurance on a group basis for the members of the fund.

Protection for Your Business Businesses are like households. They both depend on people, for their economic well being.
Life Insurance is an excellent way to provide security for a business and the following points high light this:

  • Provides key person protection - money to offset loss of profits generated by key people.
  • Provides debt cancellation - the proceeds from insurance can be used to pay loans or protect personal guarantees.
  • Provides insurance cover to maintain future ownership for the surviving family members, so they are not forced to sell assets to provide funds for the deceased share of the business.
  • Security in the early days of a business, when it cannot afford to create capitol reserves through the use of permanent life policies
  • Whenever there is a situation where one party can show that the death of another would cause financial loss, life insurance has a place.
  • If your in business with someone. Would you like to be in business with that persons next of kin ?

These are just a few of the issues that should make you think about implementing a Business Succession plan.

Taxation In most situations, premiums are not tax deductible. However in most situations benefits paid to the policy owner or the estate of the insured person are tax free.

In some circumstances it is possible to claim a tax deduction for premiums. This could apply if an employer or business is paying the premiums.

The above tax information is a general statement only. It is based on present tax laws and their interpretation. Individual circumstances may differ from this general statement and we recommend you seek independent advice on your personal tax and financial situation.