Personal Insurance - Life

There are four areas of personal insurance and they are:

Income Protection
Term/Death
Total and Permanent Disablement
Trauma

A description of these policies are set out below:

Income Protection Insurance

This form of insurance may be the most financially necessary, as it provides cover for your greatest asset - your ability to earn income.

Under income protection insurance, up to 75% of the life insured's earned income may be insured. The insurance provides an income stream in the event the insured becomes totally or partially disabled. Benefits are payable after the selected waiting period and are payable for a predetermined period, known as the 'benefit period' as long as the insured continues to be totally or partially disabled.

Waiting periods vary between 14 and 720 days. The longer the waiting period the lower the premium. Benefit periods range between 2 years to a lifetime. The shorter the benefit period the lower the premium. These premiums are generally tax deductible, since the income while on claim will be included in assessable income.

Selecting waiting and benefit periods depends on your current circumstances. For example if you have accrued sick leave or other employment benefits.

We use needs analysis to advise clients which company's policy and selection of benefits will most suit their requirements. The premium cost largely depends on the insurance company's policy definitions along with the age of the insured, the benefit period and waiting period selected, the level of income insured, occupation risk, the additional benefits chosen and whether stepped or level premiums are to be paid.

It is advisable to take advantage of the level rather than the stepped premiums if you consider keeping the policy in force for the long term. This avoids significant price increases that usually occur after the age of 40 years by averaging the cost over the life of the policy. However, you need to be aware that you pay more premiums initially than the stepped option which is only an issue if you decide to cancel the policy.

Harlocks can quote from all leading Life Insurance Companies. Our advice is based on the most suitable policy for your needs, while allowing you flexibility to choose a policy to accommodate your financial position. When quoting we provide a full Statement of Advice (SoA) which provides a comparison between companies, policies, definitions and premium cost. This allows our clients to make an informed decision based on our advice, while ensuring that the policy best suits their needs.

For more information or a quote on this product please contact us.

Life Insurance

There are three forms of life insurance policies:

Term life insurance
Whole-of-life insurance
Endowment insurance

Details of the policies are set out below:

Term life insurance

Term life insurance is the most common form of life insurance purchased in Australia. It provides a lump sum payment to the policy owner or nominated beneficiaries in the event that the life insured dies while the policy is in force. In many cases, an advanced payment is made if the insured is diagnosed with a terminal illness and has a life expectancy of no more than 12 months.

Term life insurance can be used to financially protect your family should you die prematurely. This is often done by selecting a level of cover that is sufficient to pay off any existing debts and/or provide an investment amount to generate a future income stream on which dependents can live.

We use needs analysis to advise clients which company's policy and selection of benefits will most suit their requirements. The premium cost largely depends on the insurance company's policy definitions along with the age of the insured, the sum insured selected, the additional benefits chosen and whether stepped or level premiums should be paid. We additionally analyse if it may be beneficial for you to obtain term life cover through your superannuation fund.

Harlocks can quote from all leading Life Insurance Companies. Our advice is based on the most suitable policy for your needs, while allowing you flexibility to choose a policy to accommodate your financial position. When quoting we provide a full Statement of Advice (SoA) which provides a comparison between companies, policies, definitions and premium cost. This allows our clients to make an informed decision based on our advice, while ensuring that the policy best suits their needs.

For more information or a quote on this product please contact us.

Whole-of-life insurance

Whole-of-life insurance combines life insurance with a savings/investment element. They are considered to be a permanent form of insurance as there is no specific maturity or expiry date. The premium payments may cease, e.g. at age 60 or 65 depending on the contract selected.

Whole-of-life policies contain a non-forfeiture provision, whereby if premiums are not paid for any given year, the life office will advance the premium as a debt against the policy in order to continue the policy. Interest is charged on the debt. The advancement of the premium amount continues, as long as the policy's cash value exceeds the premium debt and its associated interest charges, otherwise the policy will lapse.

Whole-of life policies can be initially expensive when compared with term life insurance and may only be required if life protection is required right through to the end of your normal life expectancy.

Whole-of life policies have lost popularity over the past decade. Only a handful of underwriters actually offer whole-of-life policies. The main reasons for the decline in popularity are:

	Improved term life insurance terms and conditions
	Growth of superannuation
	Whole-of-life insurance used to marketed as an investment vehicle, however, real investment returns over the1990's declined
	Surrender values in the early years were often less than premiums paid

Endowment insurance

These policies are similar to whole-of-life except that a benefit is payable on a specified date (maturity) or on the death of the insured, whichever comes first. They are a combination of life insurance and an investment policy. The actual payment will depend on the investment performance, the level of premiums paid and the length of time held. The maturity value is comprised of the guaranteed sum insured plus any annual and final bonuses.

They can be used for many purposes such as:

	saving for retirement
	repayment of a debt if death occurs before the loan is repaid
	providing funds for travel or for any future purposes which require funds, such as childrens' education
	providing children with a financial start in life

Endowment policies usually carry higher premiums than whole-of-life insurance because maturity value is realised earlier. If the insured person dies before the maturity date, then the sum insured plus bonuses from the endowment policy will be paid to the beneficiary or policy owner.

Endowment policies have also experienced a steep decline in popularity for similar reasons to those for whole-of-life policies. The main reasons for the decline in popularity are:

	Improved term life insurance terms and conditions
	Growth of superannuation
	Whole-of-life insurance used to marketed as an investment vehicle, however, real investment returns over the1990's declined
	Surrender values in the early years were often less than premiums paid

Harlocks can quote from all leading Life Insurance Companies. Our advice is based on the most suitable policy for your needs, while allowing you flexibility to choose a policy to accommodate your financial position. When quoting we provide a full Statement of Advice (SoA) which provides a comparison between companies, policies, definitions and premium cost. This allows our clients to make an informed decision based on our advice, while ensuring that the policy best suits their needs.

For more information or a quote on this product please contact us.

Total and Permanent Disablement (TPD) Insurance

This cover provides payment of the sum insured should you become totally incapacitated through injury or illness, and the policy's definition of TPD is satisfied. The main condition of TPD insurance is that the insured is unable to return to work. If you suffer a critical illness and unlikely to ever return to work, then TPD insurance is required to meet additional medical and rehabilitation expenses and to assist in paying off outstanding debts.

TPD insurance is usually sold as a 'rider' (additional benefit) in addition to a term insurance policy.

Generally there are three TPD occupational definitions available from which to select cover:

	Standard - unable to perform the duties of any occupation for which you are reasonably suited by reason of education, training or experience.
	Own Occupation - unable to perform the duties of their own occupation (generally available to certain white collar professional lives only and incur a 50% loading on premiums).
	Homemaker - unable to perform full time unpaid domestic duties.

In addition most TPD policies will also offer a 'Loss of limbs and/or sight' disablement definition. Under this definition the life insured is entitled to a TPD benefit if they suffer one of the following:

	permanent loss of use of both arms; or
	permanent loss of use of both legs; or
	permanent and total loss of sight in both eyes; or
	a combined loss of one limb and sight in one eye

TPD cover normally ceases at age 65 but many insurers are now extending cover beyond this age, where the benefit is paid when the insured is totally and irreversibly unable to perform a specified number of 'activities of daily living' such as:

	bathing and showering
	dressing and undressing
	eating and drinking
	using a toilet to maintain personal hygiene
	moving from place to place by walking, wheelchair, or with assistance of a walking aid.

Harlocks can quote from all leading Life Insurance Companies. Our advice is based on the most suitable policy for your needs, while allowing you flexibility to choose a policy to accommodate your financial position. When quoting we provide a full Statement of Advice (SoA) which provides a comparison between companies, policies, definitions and premium cost. This allows our clients to make an informed decision based on our advice, while ensuring that the policy best suits their needs.

For more information or a quote on this product please contact us.

Trauma Insurance

Trauma cover will provide a capital lump sum benefit on diagnosis of any one of a number of specific traumatic health conditions defined in a particular policy. The basis of trauma cover is to support your on-going survival through treatment which may be drawn out and expensive.

The lump sum benefit may be used to retire debt, pay for modifications to the home or vehicle, meet the extraordinary costs of medical and nursing care, rehabilitation and recuperation, satisfy any additional income requirements or simply provide the opportunity for a change of lifestyle.

Trauma insurance gives you flexibility to extend your recovery time. Experiencing a life threatening illness often can result in a change in your approach to life and a change in priorities. If recovery is quick your doctor may authorise a return to work before you are mentally prepared. Having trauma insurance allows you to extend your time off by giving you some financial independence. Alternatively, you may choose to return to work immediately but reduce the hours that you work to achieve your preferred balance between your career, family and personal interests.

Additional Cover

The policy should incorporate Life Insurance as well as cover for Total and Permanent Disablement (TPD) . We recommend the death option because a trauma policy will not pay on the diagnosis of a trauma condition if the patient dies within 14 days. We recommend the TPD benefit to maintain the same amount of TPD cover as death cover.

Buy Back

The buyback option enables you to purchase life insurance without additional medical evidence 12 months after the payment of a trauma benefit. There is also a double TPD option under the life insurance where you will be covered immediately for death after a TPD claim. We have quoted this option where it is available.

Taxation

The current taxation rules state that premiums are not tax deductible, nor are claim payments assessable as income.

Harlocks can quote from all leading Life Insurance Companies. Our advice is based on the most suitable policy for your needs, while allowing you flexibility to choose a policy to accommodate your financial position. When quoting we provide a full Statement of Advice (SoA) which provides a comparison between companies, policies, definitions and premium cost. This allows our clients to make an informed decision based on our advice, while ensuring that the policy best suits their needs.

For more information or a quote on this product please contact us.