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Choking on annual premium $7740

Discussion in 'Superannuation, SMSF & Personal Insurance' started by Jenny, 8th May, 2006.

  1. Jenny

    Jenny Well-Known Member

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    Have just received renewal for husband's income protection and life insurance and we are for the first time considering not renewing. Our kids are now both working and we are 2.5 years away from retirement and access to superannuation.

    If worst scenario and husband hit by bus I could live on (just) income from investment and if his super was released early so much the better.

    If he becomes ill and can't work ditto above.

    He is self employed and I don't work.

    Any thoughts, what would you do?
     
  2. Bundy

    Bundy Active Member

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    Jenny,

    Premiums seem extremely high? Does your husband have a medical condition?

    Have you tried getting quotes from other insurance companies?

    May be worth shoppring around/ even reduce the amount covered by the income protection. I'd still keep the life insurance.

    BUNDY
     
  3. Jenny

    Jenny Well-Known Member

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    does workaholic count as a medical condition?

    No - he is well and a non smoker.

    The policy provides for $6.5K per month for 5 years/ $582k life cover.
     
  4. Mark Laszczuk

    Mark Laszczuk Well-Known Member

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    Jenny,

    It really depends on your sleep at night factor. If you're (well, your husband) is two years from retirement I'd be inclined to think about how much cover you actually do really need. Income Protection can be really expensive (as you know), especially for that much cover.

    It may be prudent to have a look at the amount of cover you have and ask yourselves 'do we really need this much?' 6 G's a month is a lot, could you survive for two years on less than that, providing you can cover your investments and living expenses? If you can get away with say, 4 or 4.5, it's going to make a big difference to your wallet.

    Just something to think about.

    Mark
     
  5. Jenny

    Jenny Well-Known Member

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    thanks Mark, yes I have come to that conclusion myself. Some sort of lesser cover might be the way to go. Have made an appointment to discuss with adviser.
     
  6. TakeStock

    TakeStock Well-Known Member

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    Jenny,

    That does seem to be reasonably expensive. My cover is considerably greater and the income protection lasts until I turn 65 (fair way off yet ;) ) and yet it costs me a few thousand less than the figure you quoted. I know there are many variables with life and income insurance premium determination (occupation is very important), however, it may be worth checking the competition.
     
  7. Nigel Ward

    Nigel Ward Team InvestEd

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    I suspect it's a stepped premium and it is your hubbie's age which is the primary determinant of the premium.

    Talk to your financial adviser. PM me if you want details for a good insurance broker.

    Cheers
    N.
     
  8. Ol School Skata

    Ol School Skata Well-Known Member

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    could the cover be included in your husbands superannuation fund? Many funds have the option for Income Protection (usually for up to 2 years but some go to 5 years), Life insurance and TPD.

    Not sure of the after tax difference to your husband being self employed and either keeping policy in own name or through super.
     
  9. Jenny

    Jenny Well-Known Member

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    Thanks, Nigel we have appointment for Friday. My husband is 52.5years and although he doesn't want to wish life away he is looking eagerly to 55.

    If the renewal had come at $4,500 i probably would have paid it, but we have just shelled out for workers comp and public liability (temporarily emptied the till) and the premium hike on the income protection threw me.

    I'm inclined to scrap the cover and skid through if anything untoward happens, but my husband is more conservative and thinks perhaps if we halve current cover ie $4k per month,2years and $250k life maybe the way to go.

    Jenny
     
  10. Jenny

    Jenny Well-Known Member

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    Have finally received quotes for revised cover:-

    Husband is industrial electrican, works on some pretty heavy duty stuff - so our workers comp is v.high and effects rating of below premium.


    $5,000 per month income / 5years - waiting period 30 days $3541.47
    ............"............ 2 years ..................".... $2409.28
    ............"............ 5 years ............... 60 days $3254.47
    ............"............ 2 years ..................".... $2112.83


    Term Life Cover $600k - $2.421

    So still hefty amount to pay with revised down income.

    For the benefit of others I learnt that the waiting period means if 30 days, you get monthly payment at 60 days for the previous month:eek:

    Also if cancer/heart attack, immediate income with no waiting period. (cheerful I know)

    Also the tax office treats income payment as T A X A B L E I N C O M E:rolleyes: (BL--DY HOODS WAITING OUTISDE THE SICK ROOM FOR THEIR CUT) So pay the premium and protect yourself (be responsible) - save the govt sickness benefits and .....................

    I think we have almost decided (more discussion needed) to bite the bullet for next 2 years and have decent cover. ie 5yrs,30days @ $3541 + $2421 for life cover.

    Life insurance consultant asked about our level of debt (as life insurance should indealy cover that amount) - I said $1.85 mill and he replied "I don't want to know about it";) got to laugh eh?

    So boring subject I know, has no sex appeal at all, but needs to be addressed.

    Cheers
    Jenny
     
    Last edited by a moderator: 16th Jun, 2006
  11. Jenny

    Jenny Well-Known Member

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    Sim, I have typed the premiums in table fashion - but the post has squashed it all up?? Tried to edit, but it appeared in table fashion as I had originally typed?

    Sorry for the messy post, but don't know how to correct.
     
  12. qlds007

    qlds007 Member

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    Hi Jenny

    What was the eventual outcome with your life / ip rate query. Did you get the cover you were after at the price you were prepared to pay?
     
  13. Jenny

    Jenny Well-Known Member

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    Hi 007

    After discussion with broker ( who trotted out all the frigthening stats re illness at our age) we thought what the hell! - whats a few more thousand to the insurance companies for peace of mind. Do they use fear in their "education" process - YES.

    So hopefully only a couple more years to retirement and accessing superannuation and then will ditch the lot.

    $5,000 per month income / 5years - waiting period 30 days $3541.47
    and the life cover is what we went with.

    Cheers Jenny
     
  14. qlds007

    qlds007 Member

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    Hi Jenny

    Ok good to hear at least you appear to have peace of mind for another year.

    Depending on how well you know your financial planner you should have asked him at that level of cover to discount his commission and lower the premium.

    We often reduce premiums for clients especially at that level of cover as it helps them either save money or alternatively they can increase the level of cover for the same premium amount.

    As long as got good advice it is worth paying for.
     
  15. reidy75

    reidy75 Member

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    For anyone "younger" reading this thread, take note of the discussions!!

    Stepped premiums means cheap insurance when you are young but very expensive when you are 50+. I'm told statistics show that the most claims are made by people over 50, for both life and income protection. However, it is also the time when people have this same dilemna of can I afford to keep paying the premiums.

    I'd suggest making enquiries about level premiums - if you're around 30, it may cost a few hundred dollars extra each year, but over the course of 30 years, it's likely you'll be less than half the amount in premiums. Which means you can afford to keep paying for your insurance at 50, 55, 60.