Risk insurance policies are financial products that will pay the policy holder if the ‘insured event’ – such as becoming unwell and being unable to work – happens.
Insured events include things like temporary illness, permanent illness, temporary injury, permanent injury, or the premature death of the insured person.
Risk insurances insure your good health, which is actually your most important financial asset. That is why risk insurances are almost always the essential first step in any financial plan. Insuring yourself against a loss of income or earning ability allows you to ensure that life for you and your loved ones goes on with the quality you want, even if something unwanted happens.
We provide the complete range of risk insurance services: death cover, total and permanent disability (TPD), income protection and trauma cover. We help you calculate the type and amount of each cover that you might need, as well as discuss other ways that you can protect yourself against financial loss.
We also show you how to minimise the premiums, especially after-tax, without unnecessarily compromising the quality of the policy or the level of cover that you acquire.
If cash flow is tight, we can assist you to find ways to insure yourself that minimise the demands on your day-to-day income. And, of course, as financial planners we can help you find ways to enhance your income. This makes everything more affordable, not just your insurances.
Life cover – sometimes also known as death cover – pays money to your nominated beneficiaries in the event that you die while holding the policy.
If there is anyone who is financially dependent on you and your ability to earn employment income, you should have life cover.
Many insurers will make a payment to you in the event that you have been diagnosed with a terminal illness. This can provide wonderful peace of mind to you and your family, as you can all see that the money has arrived and the family will be catered for.
In terms of coverage, there is not a great deal of difference between insurers when it comes to life cover. That said, life cover is usually bundled with at least one other type of life insurance (TPD, income protection and/or trauma). And the various insurers differ markedly in the way that they offer these types of insurance. This means that risk insurances generally are not a ‘one company suits all’ proposition.
In deciding upon life cover, the most important decision is often choosing how much to insure for. There is an obvious tension here: the higher the insured amount, the higher the premium. In the event that you die, then the higher the amount insured the better. In the event that you do not die, the lower the insured amount the better. This means that choosing the correct amount to insure requires judgement – which is another reason why it pays to talk to an expert to determine your risk insurance needs.
Total Permanent Disability
Total and permanent disability insurance is insurance that pays you a lump sum in the event that you become permanently incapacitated and cannot earn an income. The cover is typically known as ‘TPD.’
TPD cover is often purchased together with life cover (a policy which pays your beneficiaries in the event that you die while holding the policy). This makes sense, as the amount for which you might insure your life, which is usually calculated to replace at least some of the income that you were likely to earn had you remained alive, is likely to be similar to the amount of insurance that you need if you do not die but can no longer work. TPD policies do not make a payment if you die – which is why this type of cover is typically bundled with life cover.
TPD cover can also be purchased on its own. This is known as ‘stand alone’ TPD and is often purchased by people who do not have any financial dependants and therefore might not need life cover. In these cases, the insured person would need the money themselves if they became disabled, as they could continue to need to fund their own lifestyle.
TPD is usually divided into two categories. The first is ‘own occupation’ and the second is ‘any occupation.’ These two categorisations refer to the extent of the disability required before a claim will be accepted by the insurer. The own occupation category has a ‘lesser’ level of required disability, as you need only to be disabled such that you can’t undertake your current occupation. For example, if you are a surgeon and you lose the function in your hands, this would generally qualify you for a claim under an own occupation policy as you will no longer be able to perform surgery – even though you could perhaps do other work that does not involve your hands.
‘Any occupation’ has a ‘higher’ standard of disability. This means you need to be more disabled in order to qualify for a claim. Accordingly, the premiums for any occupation TPD are typically lower than for own occupation.
Usually, professional people or people with a particular expertise prefer own occupation policies. People in less specialised roles often cannot access own occupation policies and therefore can only access any occupation cover.
TPD cover is often purchased using superannuation benefits. This has two potential advantages. Firstly, it can reduce the effective after-tax cost of a policy, as contributions made into super that are then used to pay for the cover are taxed at a lower rate than many taxpayers pay on their personal income. TPD premiums are not generally tax deductible if paid by the insured person directly. Secondly, using super can free up current cash flow to be used for other purposes. Essentially, using super means using some of your retirement benefits earmarked for the future to pay for insurance that you need today. That said, there can be restrictions on using super for TPD, so this option is not for everybody.
The premium that you pay for TPD cover depends on a range of factors. Chief among these is the amount for which you are insured. How much to insure for is a personal decision that must take into account the various expenses you are likely to face in the future. Every person is different here, so there is no one size fits all approach that can be taken. What’s more, the different insurers use different definitions of what constitutes TPD. This is why it pays to sit down with us and let us help you determine exactly how much you should insure for and who should provide the cover.
Income protection cover is insurance that pays you in the event that you are unable to work due to illness or injury. As the name suggests, the policy replaces the employment income that you lose due to being unable to work.
Generally, you can only insure a maximum of 75% of your income in this way. Policies are divided into two types: agreed value and indemnity. An agreed value policy is one where you agree how much you will be paid in the event that you make a claim. The agreed value is usually limited to no more than 75% of your income at the time that you commence the policy. This kind of cover can be useful if their is a chance that your current income will fall in the future – you can effectively ‘lock in’ the current level of income. An indemnity policy uses the income that you were earning in the period prior to actually becoming injured or ill to determine how much you will be paid. This kind of policy typically only suits people with a very steady and predictable income, as the amount that may be paid in the future will be less if the person’s income falls.
The premium paid for income protection policy is determined by the type of policy (agreed or indemnity). The premium is also affected by things such as the waiting period that must be met before a claim can be made. Waiting periods can be as little as 14 days or as long as two years. Because fewer people are likely to be ill for a longer period, policies with longer waiting periods attract lower premiums. That said, fewer people can afford to wait for longer periods before payments commence, which means that more people need the shorter waiting periods.
You can also nominate the period over which you would like claims to be paid. You can insure to a particular age (65 is a common one) or for a defined period of time, such as five years.
As with TPD, income protection policies vary from insurer to insurer. If you want to get the insurance that best suits your purposes, it pays to talk to an adviser who understands the different options that are available and the different offerings that each insurer makes.
Trauma cover is sometimes known as critical illness cover. Trauma cover is a form of insurance that pays you a benefit in the event that a specified health issue occurs. The specified issue can be an illness or an injury, and the range of specified issues is usually restricted to major illnesses or injuries such as a stroke, a heart attack or cancer.
Under the terms of a trauma policy, you are paid a set amount for a given experience of illness or injury. This amount is received as a lump sum and is typically used to pay for medical expenses, including rehabilitation costs, and to replace any income that may be lost as a result of the illness or injury. The amount that may be paid is established at the time the policy first commences.
There can be substantial variation between the different insurers when it comes to the trauma cover that they provide. Different insurers will cover different types of medical issue. What’s more, because trauma cover is typically taken out in conjunction with other forms of risk insurance, choosing the right trauma policy is also a matter of choosing the right kind of policy for these other types of insurance. As a result, it pays to talk to an expert when choosing the appropriate level of cover and the best policy for your circumstances.
We provide a wide range of risk insurance advice to our clients. Through our licencing arrangement with Dover Financial Advisers, we enjoy a huge reservoir of technical expertise and practical experience dealing with a wide range of client demographics. These range from young adults looking to start a family to individuals moving into retirement phase.
We provide a full range of assistance with all of your life insurance needs. This includes helping you decide how what type and how much cover you need, identifying the best provider of insurance for you, managing the application process and even providing assistance if you ever need to make a claim.
We pride ourselves on our courteous, professional service and you can be assured that we are striving to work in your best interests at all times.
Meet Our Team
We bring a wide range of highly trained and qualified staff with years of experience under their belts to make sure each client receives the best possible personal advice.
We continuously and proactively look for ways to improve our clients’ risk insurance and wealth, with all things being done in the pursuit of our core focus of enhancing client’s financial profile.
Our aim is to work in your best interests. We are actively committed to a code of ethics designed to achieve best practice in financial planning. We prioritise your entitlements as our client at all times.
What Our Clients Are Saying About Us
“We have been a client of Lite Insurances for over 10 years. Their advice in regards to protecting our family gives us the peace of mind that should something unintended happens, we have all bases covered.”
Jane and John
“Lite Insurances team have made the management of my financial affairs not only extremely easy, they have also given me a renewed sense of control and I finally have peace of mind with where I am headed.”