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Personal Protection Plan – do you have one

28.07.2015 by GTC Financial Services

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Every person and family should have a plan to help them cope in the event of an unexpected crisis. At GTC Financial Services we call this a ‘Personal Protection Plan’

No doubt you have insured your car as the risks of damage are obvious to you on a daily basis. You will almost certainly have insured your home and contents against fire, burglary or storms. But what about your greatest asset: your income?

Statistics show that a 35-year-old Australian earning an average income is worth over $2.4 million in lifetime earnings, assuming no increase in earnings. How would you cope if your family’s primary income earner met with serious illness or accident?

Unfortunately statistics also show that the risks are greater than generally recognised. Look at these:

  • Cardiovascular disease, which includes stroke, is Australia’s biggest killer, accounting for over 30,000 deaths in 2013.
  • Some 4,400 people with dependent children die in Australia each year.
  • According to Australian Bureau of Statistics of the 531,800 people who had suffered a work-related injury in 2013-14 only 34% received worker’s compensation payments.
  • In 2009, 8280 deaths were attributed to Alzheimer’s disease and Dementia. By 2013, this had increased to almost 11,000. An increase of 32%.

Your Personal Protection Plan

Professional guidance is crucial in establishing your personal protection plan. You need to consider the extent of your financial commitments and review what assistance may already be in place. This may include insurance cover within your superannuation, employer protection, existing insurance policies or other sources.

Fortunately a range of insurance policies are available to cover the risks you confront. These include:

  • Loss of Life or Total & Permanent Disablement. By including this under your superannuation it is effectively a tax deduction as your superannuation comes from pre-tax income.
  • Income protection. A critically important cover for income earners. It will provide you with income in the event of sickness or accident for a predefined period. If you are a small business operator you can include the costs of operating your business while you are incapacitated. The premiums are a tax deduction.
  • Trauma insurance. This is sometimes referred to as critical illness insurance and provides for a lump sum in the event of suffering a specific injury or illness. It is ideal for a non-income earning partner who may not qualify for income protection.
  • Child insurance. Many families are devastated when a child is struck with a critical illness. This may mean one or both parents having to give up work while the child undergoes lengthy treatment. Some companies are now providing specific policies to assist the family in such a catastrophe.
  • Health insurance. While free treatment is available through the state hospital systems, this may involve traumatic and expensive delays. It is highly desirable for families to have health insurance cover and the cost may be minimal when you consider the additional Medicare Levy you may otherwise have to pay. Further, the cost is subsidised by the federal government.

Don’t leave it too late, contact GTC Financial Services as we can help you put a personal protection plan in place.

For more information or Take the Financial Planning Trust Assessment

GTC Financial Services Pty Ltd is a Corporate Authorised Representative No 314227 of Futuro Financial Services Pty Ltd ABN 30 085 870 015 Australian Financial Services Licence No.238478.

The information contained in this document is by way of a general summary only and has been prepared without taking into account any person’s individual objectives, financial situation or needs. Before making any decision a person should consider the appropriateness of the information to their individual objectives, financial situation and needs and if necessary seek advice from a suitably qualified professional.

 

Sources:

www.abs.gov.au, Australian Bureau of Statistics, Table 6302.0

www.heartfoundation.com.au

www.abs.gov.au, Australian Bureau of Statistics, Table 6324.0 Jul 2013 to Jun 2014

www.abs.gov.au, Australian Bureau of Statistics, Table 3303.0 Causes of Death, Australia, 2013 (released March 2015)

Image courtesy of Vichaya Kiatying-Angsulee at FreeDigitalPhotos.net

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