Life Insurance Brokers Brisbane

A standard life insurance policy assumes a fairly straightforward picture. One income, one mortgage, and not a lot else to explain. But the reality of finances in Brisbane today is not like that at all. You may have an investment property as well as a family home, a business with debt against your name, children from a previous relationship with specific financial commitments, or aging parents to support.

Each one of those layers will affect the amount and type of cover you need. A one-size-fits-all approach from a comparison website will not be able to take into account your business loan risk, your binding death benefit nomination arrangement, and the fact that your ex-spouse has a legitimate claim to part of your estate. That is when advice pays for itself, many times over. Our personal insurance advisors will work through all of that complexity with you to ensure that nothing is left out.

It’s the most common blind spot we encounter when working with Brisbane families. You have some form of life insurance through your super; therefore, you think you’re covered. However, what you don’t know is that the default super cover, although cheap, is generic. It pays out between $100,000 to $300,000 if you die. Sounds good, but let’s crunch some numbers.

Consider a family with a mortgage of $650,000, children less than ten years of age, and one breadwinner who earns $120,000 a year. What happens if this breadwinner dies? They must pay off the mortgage, support their children for at least 15 years, pay for their education, and replace their lost income, which was sustaining them in the first place. A default superannuation payment of $200,000 is nowhere near enough. After paying for a funeral and burial, and any other debts, they might be able to afford 18 months of mortgage payments.

There’s also a structural problem with life insurance held within superannuation, which pays out to the trustee of the superannuation fund rather than your family directly. The manner and timing of the payout will depend on your nominations and your overall estate plan, and in some cases, the discretion of the trustee. If your nominations have not been kept current and binding, the money may not go to the people you want it to go to, or it may not go for months when your family can least afford to wait for it. The manner in which your superannuation fund makes decisions about this is part of the process of getting your life insurance right, and this is covered by our superannuation advice service.

We review your super-held cover as part of all life insurance work. There are certainly times when it makes sense to keep some cover inside super for tax benefits. There are also times when the restrictions and limitations make it better to hold cover outside super. The answer depends on your financial situation and your estate structure.

Life cover pays a lump sum to your chosen loved ones when you pass away. The idea behind it is simple: to replace the security that your income and your presence provided to your family. The lump sum must be enough to pay off your mortgage, support your family for a certain number of years, provide for your kids’ education, and settle any other outstanding debts or obligations you have.

The figure varies from person to person. A professional with no dependents and a modest-sized mortgage might require $300,000, while a breadwinner with a family of four, a $700,000 mortgage, and a stay-at-home partner might require twice that amount or more. We don’t use any formulas or rules of thumb to determine your actual need.

If you become permanently disabled and unable to work again, TPD cover pays a lump sum. This is something that people do not think about, but statistics prove that you are more likely to be permanently disabled during your working life than you are to die. The cost of permanent disability is higher than death because you are still alive and still using resources, even if you need to be taken care of.

TPD can be based on “any occupation” or “own occupation.” This distinction makes a huge difference when you need to claim. “Any occupation” means you need to be unable to work in any job suitable to your education and experience. “Own occupation” means you need to be unable to work in your specific job. I think own occupation cover should be recommended to most clients, but it does come at a higher price.

A serious diagnosis can completely disrupt your finances, even if you eventually make a recovery. Trauma cover provides a lump sum payment if you’re diagnosed with a specific condition, such as cancer or a heart attack. You don’t have to be permanently disabled like you would need to be with a TPD policy. You simply need a diagnosis.

The benefit here is the flexibility it offers. The trauma benefit lets you stop working to focus on recovery, pay for treatments not covered by Medicare, pay the mortgage when you are not working, or modify the house if your condition requires it. For many families, a serious illness without trauma insurance means going through savings and debt at the worst time of their lives.

Where life insurance and TPD insurance protect against a single catastrophic event, income protection insurance replaces your income when you are unable to work due to illness or injury, paying a monthly benefit (usually up to 75% of pre-disability income). Where life insurance and TPD insurance protect against a permanent event, income protection insurance protects against the far more likely event of being off work for three months, six months, a year, or more, and needing to replace your income until you return to work.

You can choose your waiting period, i.e., the amount of time before your insurance kicks in (30, 60, 90, or 120 days), and your benefit period, i.e., how long your insurance will last (two years to age 65). You can choose to have a higher waiting period in return for lower premiums, and if you have sufficient savings to last the first 90 days, then this might be a good option. Your premiums for income protection insurance are also tax-deductible in Australia if your insurance is not in super.

We start with what your family would owe if you were to die or become disabled tomorrow. This includes any outstanding mortgage on your home, any loans on investments, car finance, credit cards, and other living expenses. We also need to consider funeral costs and any immediate expenses that might arise in the weeks after a death or disability.

It’s not a five-minute exercise. We’re looking at bank statements, bank loan schedules, and household budgets, rather than depending on people’s estimates, which tend to underestimate real spending by 20% to 30%.

Next, we determine how much money your family might need to replace and over what period of time. If you have young children, this replacement period might be 15 to 20 years. If your partner works part-time and must continue to do so for caregiving reasons, this is also factored in. What about other financial goals, such as providing for private school education or assisting with a house deposit for your children?

The aim is to get a cover that is based on your real family needs, not one that is based on a generic multiplier applied to your income. This is particularly important for high income earners, as the difference between standard cover and real needs can be quite large, and as such, our financial advice for high income earners includes insurance as part of the overall plan.

Nearly everyone has some level of life insurance cover within their superannuation account. We also review the level of cover that you currently have, the cost of that cover, the policy details, and the adequacy of that cover before making a recommendation about additional cover that may be required. Your superannuation cover may be adequate and just need a top-up, or it may be so inadequate that it needs a complete overhaul due to policy exclusions, the definition of Total and Permanent Disability, and the premium erosion of your superannuation savings.

We’ll determine if keeping the cover in superannuation or outside superannuation, or a combination of both, provides the best solution for you when comparing tax benefits and premium costs with the certainty of claims.

We are not an authorised representative of a dealer group or a product provider. We actually have our own Australian Financial Services Licence, and that in itself is the basis for all of our recommendations that we make to you. So when we say that a particular policy is the right fit for you, that’s actually true because we’ve analysed the market and that policy is indeed the best fit for you. There’s no preferred product list and no sales targets from a parent company.

Our team includes Certified Financial Planner professionals who are qualified to the highest level in financial planning in Australia. We also have dedicated risk insurance specialists in-house within the practice, so your insurance cover is created by someone who works with life insurance claims and structures on a daily basis, not a generalist who happens to sell insurance as a secondary business.

That level of expertise in financial planning, combined with expertise in insurance, is not common in Brisbane. This ensures that your insurance is technically correct and well-structured within your overall financial plan.

This is where Solace differs from a traditional insurance broker. We do not focus exclusively on your life insurance. Your life insurance forms part of your overall financial plan, which also incorporates your superannuation plan, your investments, your tax situation, your estate plan, and your retirement plan.

That’s important because these factors interact. Your amount of life insurance requirements varies depending on your super balance. Your TPD structure needs to fit in with your estate plan to ensure the money goes to the right people. Income protection also interacts with your tax situation, and this impacts your superannuation savings. We can sell you a standalone insurance product. We construct a protection plan that integrates into a financial plan to help you get to where you want to be in the future. Our wealth management service is based around this philosophy.

When your circumstances change (and they will), we review your cover as part of your regular financial planning review, rather than leaving you with cover that was suitable five years ago but may not be suitable now.

Insurance firms base their pricing for risks on a set of fundamental factors. Your age is the first major factor. Your premiums rise with your age, and the slope increases sharply when you turn 50. Your medical history also plays a role. Pre-existing medical conditions, your family medical history, your BMI, and your smoking status are all important. If you have had a heart attack, for instance, your premiums rise sharply. In fact, some firms may not cover heart attacks at all.

Your occupation is also a factor; a desk-based professional will be rated lower than a tradesperson working at heights. Lifestyle factors such as hazardous hobbies and travel to high-risk countries, as well as alcohol intake, are also taken into account.

While we cannot alter your age or your medical history, we can ensure you’re declared correctly, i.e., not under-declared, which may result in a claim being declined, or over-declared, which may increase your premium unnecessarily. We’re also aware which insurer will provide you with a more favourable quote depending on your profession and health status, so we can target your application accordingly.

One of the best ways to manage the cost of the premium is the position that the cover is held in. Life insurance cover held in super is paid from your super balance with pre-tax dollars, making it cheaper by 15% to 30%, depending on your marginal tax rate. This is a big saving if your premium is $3,000 per annum.

The trade-off, of course, is that coverage within super has limitations. This includes a 12-month “any occupation” limit on TPD claims. Payments are made to the super trustee rather than you. And every dollar you pay in premiums is a dollar you’re not earning compound interest on. For people nearing retirement, this trade-off is an important one, particularly if you’re considering what your insurance choices mean for your retirement planning down the line.

For many clients, the answer is a combination of both: holding some of the cover in superannuation where the tax advantage is most valuable, and holding the rest outside superannuation, where the policy benefits are more favourable, and the claims process is simpler. We will model both scenarios so that you can actually see the dollar difference and make a more informed decision.