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Income Protection,TPD,Trauma,Death

Discussion in 'Superannuation, SMSF & Personal Insurance' started by Stevec, 7th Mar, 2006.

  1. Stevec

    Stevec Member

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    Hi all,

    Would like your opinions on the above insurances. I already have all of the above, but I'm reviewing all of them atm, especially TPD, Trauma and Death. I'm 29 yrs old, still single, no PPOR or dependants, but have 1.5 mill + approx in assets, i.e IP's/shares, with associated debts.

    The way I see it, is that income protection is obviously important, but the others I don't know how much to have. Death I see as not necessary, If I die my parents/sister can sell up and take profits,or continue my structure. TPD or Trauma will come in handy if I get cancer, heart attack etc. to cover hospital, operations or whatever else with regards to the situation.

    What type of figure should I be looking at??? For me atm I think protecting my income as priority, but don't know what amount would be good for Trauma or TPD. I think I only want these to cover any bad medical situations that may arise. What is satisfactory? I don't think I need to pay extra premiums just to pay out loans as my structure should be self supporting some time in the near future.

    So if the worse was to happen, my investments should look after themselves, but would like to have extra in a policy to meet those extra expenses. So how much?

    I know its hard to say, but would like some ball park figures of what people think is acceptable to cover the dreaded health situations that may arise in the future.

    Thanks,

    Stevec
     
  2. Glebe

    Glebe Well-Known Member

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    I have no experience in this area, I just wanted to say that it's awesome someone in their 20's has so many investments behind them! You're way ahead of the game.
     
  3. Mark

    Mark Member

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    Stevec

    Your comments and assumptions about what you need by way of insurance certainly seem sensible. I must stress however NOBODY can guide you with any degree of accuracy on this matter without knowing a lot more about you and your situation. As general and broadly based your solicitation, be weary to take any action from responses via the forum (despite the intellence and investment savvy that exists amongst the members).
    You need to speak with a financial planner or insurance broker!

    Congratulations on what you have achieved to date, most admirable!

    Mark
     
  4. BSB

    BSB Well-Known Member

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    Steve C,

    If I were a smart young lady I'd be inviting you over for a perfect home-cooked meal... but seeing as I'm not....I'll share the fact that I'm in a similar boat, insurance-wise (minus about 600-700K in net worth however...).

    I used be a contractor where Income protection was more-or-less mandatory. However, I now have a full-time job with a govt. employer where the mandatory super fund has a certain level of income protection insurance included. I'm about to venture down the insurance broker path (with a gent recommended by Navra Financial Services) to also sort out some of this stuff. At present I'm up for almost 2K per year for the Income protection thru MLC but have a nasty feeling I'm doubled up in this area. Death cover(why they call it 'life' escapes me...) is rather pointless if there are no dependents whatsoever.
    That's my two cents worth...

    BsB
     
  5. MichaelWhyte

    MichaelWhyte Well-Known Member

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    BSB,

    I'm not sure that the $1.5M is his net worth. He says he has that many assets "with associated debts", so I'm assuming net worth could be as little as $500K odd with $1M in borrowings.

    SteveC, noty trying to talk down your situation at all as its still great. Its just important to understand the mix of borrowings and net worth if you're looking for advice on appropriate levels of insurance. So, could you clarify what your total holdings are and the amount of your borrowings against these. Also, your cash flow plays a critical part in the equation too.

    I personally have about $1.6M in assets and borrowings of about $600K so my net worth is around the $1M mark. I also rely on my single income to predominately fund all these holdings and don't presently even have income protection insurance, so better go get some. I do have life, trauma and D&PD insurance though.

    Cheers mate,
    Michael.
     
  6. Bob

    Bob Well-Known Member

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    Still not bad at 29. He isn't paying off a PPOR and obviously pays rent or board, which is even better.

    Bob
     
  7. MichaelWhyte

    MichaelWhyte Well-Known Member

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    Yep, as I said, still great!

    Cheers,
    MW
     
  8. Nigel Ward

    Nigel Ward Team InvestEd

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    SteveC

    I absolutely agree with Mark. Figuring out an appropriate insurance plan requires not only detailed examination of your current assets and liabilities and cashflow requirements, but also it should cater for your future investment and life plans. Your family situation could change ;)

    The main problem for most people in your position is not dying...rather it is living for another 30-40-50 years with partial or total disability. Things are bad enough in that situation...you don't want to be living on handouts or put in a sub-standard facility when you could insure to provide appropriate care/assistance.

    My 2.2c
    N.
     
  9. Glebe

    Glebe Well-Known Member

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    Yeah but at the same time, insurance companies are great at taking your money but there are a million and one clauses that you need to weave through to get some sort of payout back.
     
  10. qlds007

    qlds007 Member

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    Steve

    No sensible recommendation could be done without the need of full Client Date Fact Find.

    Anyone who is offering an opinion without this information is doing so without you best interest at heart and is fact breaching the Corporations Act.
     
  11. TryHard

    TryHard Well-Known Member

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    It took ages to find a decent forum where people were prepared to offer general advice and considered assistance without :
    a) Wanting a payment upfront or in some way to generate some off-forum commercial arrangement or
    b) Ranting and waxing lyrical with some personal axe-to-grind.

    That's why I like InvestEd :D

    I sincerely doubt anyone is breaching the Corporations Act by offering a personal opinion in response to a direct question on a web based forum.

    Are you suggesting that one or more of the responses on this thread constitute a breach of the Corporations Act ? If so, I think you're wrong.

    Apologies if I misunderstood the intent of your post. Maybe you're just pointing out to Steve that he needs to engage professional advice - which I am sure he knows, but that doesn't prevent the freedom of posting a query on InvestEd, thank god ;)

    Cheers
    Carl
     
    Last edited by a moderator: 25th Oct, 2006
  12. TryHard

    TryHard Well-Known Member

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    Sorry, one other thing ... just to check, is a Client Date Fact Find like a really rigorous internal examination - it sounds more thorough than the Financial Fact Finders I've seen

    :D
     
  13. Stevec

    Stevec Member

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    Exactly that.

    The reason I posted this was that I just wanted to see what other peoples thoughts were. I have followed this forum from its inception, as I value highly the opinions expressed on this forum by its regular contributors.

    Yes I have seeked professional advice and have assessed what they have reccommended.

    To me though, the best learning experiences/advice/opinions and people I have come across to help me on my financial journey have come from this forum and over at SS. I just don't like to go to XYZ business and have them come up with all the crap as to why I should hand over X amount of dollars.

    People who find the time to contribute to these forums and help each other out, are the ones who 'deserve the sale' so to speak, even if they are not the cheapest. Any good or switched on investor knows they need legal advice, but forums like this are valuable resource for people like me.

    Cheers,

    Steve.
     
  14. qlds007

    qlds007 Member

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    TryHard

    The post was in response to SteveC specific questions:

    The way I see it, is that income protection is obviously important, but the others I don't know how much to have.

    What type of figure should I be looking at??? For me atm I think protecting my income as priority, but don't know what amount would be good for Trauma or TPD

    My comment was that no-one without the completion of a complete Data Fact Find was able to make comment with a degree of professionalism.

    The Data Fact Find is a complete Financial Analysis of the clients needs although each Dealer Group will have its own name for such a document.

    Yes any Financial Adviser that answers this question whether it be on this forum on in person without the Date Fact Find is indeed breaching the Corporations Act and there is much case law to support it.
     
  15. TryHard

    TryHard Well-Known Member

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    Hi Richard

    Well I wonder whether your expectations of this community forum and the expectations of other members (many of whom have actively contributed over a long period, as indicated by their number of posts) are different ? I don't post here looking for a 'professional' engagement with someone - I look for the opinions and advice of a range of people with different experience to my own.

    For my part, I don't intend to complete a Financial Fact Finder every time I ask a question on here, and I won't be expecting a person's life story in writing if I am asked to give my opinion on an issue.

    Its typical to see legislation inappropriately applied at the expense of common sense - no great surprises there. I just hope raising issues like this doesn't affect the previous quality of open discussion we expect on InvestEd.

    :cool:
     
  16. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    Any licensed financial planner does indeed need to take great care about the way they answer questions in a forum - especially if they have identified themselved as a planner. So long as it is made perfectly clear that the comments are not to be taken as advice (which could not be reasonably given without many more facts as mentioned), then I think it is reasonable for them to give some basic comments in the name of education.

    However, the rest of us don't have these limitations :D

    As TryHard mentioned, one of the points of forums like this is to help educate each other about the basic concepts and requirements for various aspects of wealth creation and wealth management. Even if it is just so that you have a better set of questions to ask your advisor when you eventually do get to meet with them!

    However, I will mention that unfortunately, personal insurance is (in my opinion), one of the "black arts" of wealth management, and as such, there's not likely to be too many non-professional "experts" around who can really add much value beyond their own personal experiences when they had their own insurance set up (which may be completely irrelevant to the current discussion).

    I'm not sure of too many "normal" people who spend their spare time researching insurance :rolleyes:

    If there are these "beyond normal" people in our membership who aren't constrained by licensing laws, please stand up and help us all :D
     
  17. Nigel Ward

    Nigel Ward Team InvestEd

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    I don't think anyone has suggested any numbers in response to the query. In fact people basically said "Figuring out an appropriate insurance plan requires not only detailed examination of your current assets and liabilities and cashflow requirements, but also it should cater for your future investment and life plans." or something along those lines ;)

    To provide financial product advice you need to be
    a) appropriately licensed and
    b) to know your client.

    Use of various questionnaires or "fact finders" is one way that most financial planners attempt to address (b). I think it's a bit dangerous though to suggest that merely having a client complete a fact find means you automatically then know that client sufficiently to advise them.