Personal Insurance Adviser Brisbane

Most people don’t think about personal insurance unless something happens that makes them have to. A diagnosis, a near-miss, a friend of a friend who was unable to work for six months, a scare for a partner. By then, the conversation needs to happen, but in a rushed way that it shouldn’t have to. A personal insurance adviser works with you to make these decisions clearly, well before something happens, so you have a real financial safety net if something goes wrong.

Solace Financial is a Brisbane CBD-based independent financial planning practice that offers personal insurance advice as part of a broader service to manage your financial future, rather than a standalone insurance product based on your actual circumstances. If you are aware that you require advice with your insurance requirements, you can book a free initial consultation with our team to start the process.

Your ability to earn an income is probably the most valuable asset that you have. If you’re making $120,000 a year and you’re 35 years old, that’s about $3.6 million in future earnings that’s ahead of you before you ever think about retirement. Personal insurance is designed to cover that number and everything that it represents.

A personal insurance adviser considers your entire financial situation, your debts, your dependants, your super balance, your existing insurance coverage, and works out what gaps there are. More does not mean better. More often than not, it’s working with what you already have and getting it to pay out when you really need it to. More often than not, it’s realising that you’re overinsured in one area and seriously underinsured in another.

Where an adviser can add the greatest amount of value is in the detail. Policy wordings vary between insurers, and it is the details that can make a significant difference at claim time. Definitions of disability, waiting periods, benefit periods, exclusion clauses; these can make a policy effective or merely appear to be effective on paper, and as part of our overall financial planning service, we assist clients to ensure that the details meet their requirements.

Personal insurance is not a single product, but a range of insurance products designed to protect against a range of risks at different times in your life. Here’s what we recommend, and why each insurance exists:

The first step is to understand what it is that you’re protecting: your income, your debts, your dependents, and your long-term goals. Once that’s clear, we can work out the difference between what your current assets (superannuation, savings, your partner’s income, and existing policies) would provide and what your family would actually need if the worst were to happen to you.

This gap analysis provides us with a dollar figure for each type of cover. It also provides us with information as to where you might be paying for insurance you don’t need. Many clients come to us with default cover in their super, which is duplicating cover they have elsewhere, or income protection policies with a two-year benefit period when they actually need cover to age 65.

Once we are satisfied with the type of cover that you need, we start researching the market. Solace Financial is independent, which means that we are not tied to any one insurance company. So we can look at all the policies that are on the market and determine which one is best for you in your circumstances. The advice that we provide is documented in a formal document called a Statement of Advice.

This is one of the most common questions we are asked by our clients, and the answer to it is never simple.

The advantage of having your personal insurance within your super is that your premiums are paid out of your super balance rather than your take-home pay. To many people, this sounds like a good idea. However, in some cases, it may be the right structure, especially for life and TPD insurance, where the tax implications of receiving a benefit are less complex.

However, there are some trade-offs. Insurances within super can eat away at your retirement savings over time, particularly if premiums increase as you get older. A 40-year-old contributing $3,000 a year in premiums from super will have spent more than $75,000 on insurance premiums by the time he or she retires, as well as investment earnings on those premiums. This can have a significant impact on a person’s financial future if they have a small super. Getting good superannuation advice is key to understanding the relationship between insurance costs and your long-term retirement savings.

There are also structural limitations. For example, income protection policies held within super are taxed as assessable income when you receive the benefit, whereas a policy held outside super can be structured to provide a tax-free benefit. TPD cover held within super tends to be limited to “any occupation” definitions, which have a more onerous test to meet than “own occupation”.

Then there is the issue of ownership and control. For policies under super, ownership rests with the trustee, and here, there may be issues with nomination and how quickly your family receives the lump sum from your life insurance. For policies owned personally, you are in control.

Our method is to model both options against your actual numbers. The answer may be to hold cover inside super, outside super, or a combination of both. We will look at where the tax and cash flow advantages of holding cover inside super are real, and where holding cover personally will give you better definitions and more control.

Every personal insurance policy has premiums that are based on one of two structures, and the choice between them has a larger impact than people realise.

Stepped premiums start off low but increase every year as you get older. They are recalculated every year based on your current age. This means a policy may start off at $1,200 a year when you’re 35, but by 50, you’re paying $4,500 a year, and by 60, you’re paying $9,000 or more. The obvious attraction of stepped premiums in the early years is that you’re paying a lower amount when you need the money most. However, you’re paying a lot more as you get older, and many people drop out in their 50s when they need the cover most because it’s no longer affordable.

Level premiums are fixed to the age at which the policy begins. They are more expensive to begin with, typically 80% to 120% more than a stepped policy at the same age, but tend to be flat over time, with only changes to CPI or insurance-wide rate changes applying. Over a 20- to 30-year holding period, a level premium policy will almost always be cheaper.

So when does each make sense? Stepped premiums may be suitable if you need cover only for a specific period, such as 10 years, when your mortgage commitment is high, and your children are young, and you expect to scale down cover when your commitments lessen. Stepped premiums may also be relevant if your finances are genuinely stretched at present, but you would otherwise not have any cover.

Level premiums tend to suit anyone who anticipates having the insurance policy for 15 years or more. If you are aged 40 and anticipate having the policy until the age of 65, level premiums will save you a substantial amount of money during that time. We will run the calculations for both types of structuring so that you can see exactly when the crossover point occurs for your age and cover amount. Premium structuring is just one of a number of areas that a qualified and experienced wealth management adviser can help save you money on your premium costs.

We may even consider suggesting a blended approach, where level premiums are paid for cover that you anticipate holding long-term, such as income protection up to age 65, and stepped premiums for cover that you anticipate winding down as your wealth increases and your debts fall.

One of the toughest things a family has to go through is filing an insurance claim during a health crisis or after losing a loved one, and it is a complicated process with specific requirements from the insurance company, which is not exactly what you need during a hard time.

This is where having an adviser makes a tangible difference. If you are a Solace client and you need to make a claim, we manage the process from start to finish. This includes informing the insurer and obtaining the correct claim forms, as well as helping you to obtain the medical evidence and financial information that the insurer needs, as well as any supporting statements.

We also understand how the insurance company handles claims internally. Each insurance company has its own process and its own definitions of medical terms. We’ve seen claims delayed or denied due to a lack of paperwork or the use of words that do not match the definition of the policyholder’s condition. Having someone in your corner who understands the definitions and can present your claim clearly makes the process go much smoother and prevents unnecessary setbacks.

We are the point of contact between you and the insurer throughout the entire claim. We deal with any further information that may be necessary. We also deal with any disagreements that may arise in the process. Our support does not end once your claim has been paid. This is because a successful claim often means that your entire financial plan needs to be restructured.

You shouldn’t need to become an expert in insurance policy wordings on the worst day of your life. That’s our job.

If you took out personal insurance a few years ago, or if you have been relying on default insurance in your superannuation fund, there is a strong possibility that your insurance no longer reflects your current circumstances.

Things change quickly. The amount owed on a mortgage grows. Kids are born. Wages rise. Relationships end. Health conditions develop. Any of these changes can create a gap between what your existing policy provides and what your family may actually need. We frequently work with clients whose premiums are being paid on a policy that was adequate five years ago, but would be insufficient now.

When reviewing your policies with Solace, a review process begins by comparing your existing cover with your current circumstances. This includes comparing your sum insured, benefit periods, waiting periods, definitions, exclusions, and premium structure. We also review your existing beneficiary nominations and check that your cover is in the most tax-efficient structure. If you are paying more than you need to for your existing cover, we will also flag that.

Sometimes the review will reinforce that your existing policy is still appropriate, and all you need is reassurance that nothing has been missed. Other times, we will find significant enhancements, such as a more accurate definition or lower premium with another insurer, or even a restructure that can save you thousands during the term of the policy. For clients nearing retirement, the review may tie in with discussions regarding your overall retirement planning, including when to reduce your cover and how to adapt your current financial protection plans.

If you think your insurance may not be adequate or that it may not have been reviewed recently, or that it may not have been reviewed independently of the insurer, a review may be a good starting point. There is no obligation to make any changes. You can request a review as a standalone service or as part of a financial planning conversation.