Budget and Cashflow

When doing a budget it pays to know what matters most to you and your family


 Like many Australians I hold Home & Contents insurance to protect against a major financial loss (namely my home asset).  This makes my bank happy too.  Recently I did some research and budgeting analysis on general insurance premiums and why they had risen so much over the past few years.  I took the time to call my general insurer to ask about the levels of cover mainly on the home portion of the poli

I was astounded to learn the following:

  • The insurer in the event of total home destruction had the option to tell us who we used to build with again depending on whether the home was originally built by a mass provider or private builder (this effects the price of the new construction greatly if you know anything about the building industry.
  •  The policy indexed each year by quite significant amounts far greater than the cost increases of some building companies and building supply products.
  •  The insurer would only provide an insurance payout to an amount that would replace our original home using today’s market costs despite us having held considerably higher levels of cover thanks to indexation on the policy.
  •  Reducing the cover back to today’s actual replacement value saved us approximately $40 per month alone.
  • Increasing the Excess from $250 to $1,000 reduces the cost of most home and contents policies by 50% to 70% all other things being equal.  That’s amazing!  After all who would claim for the cost of a broken window knowing that the repair is under your excess anyway?
  •   If you can afford to pay annually, do it, even if it means putting it on a credit card and paying the premium off over 3 months.  You can save 15% or more in some cases.

The Real Important results for Australian families

 The above analysis combined with smart budgeting techniques saved us $122 per month!!!  No, that is not the important thing, but it’s a start.  According the insurer and my calculations and research on building costs we are still 100% covered for loss of our home.

 This level of saving allows the average male or female aged 35-40 to hold $250,000 to $300,000 of life and trauma cover.  Alternatively it would quite easily fund most of (if not all) a comprehensive income protection plan for most people of that age.

 Australians are obsessed with spending money on things to impress people they don’t know or like.  Almost everyone spends huge premiums each year on cars 4 years older or more that are worth a fraction of their replacement cost.  What many don’t realise is why they are happy to pay good money to protect a material asset for fear of losing it what they don’t realise is without adequate personal insurance in place they risk loosing far more or the lot.

 By thinking outside the square it is possible to improve your position beyond what you first may have thought possible.  Money is a finite thing but its how you spend what you have that’s important.

 We realise times are tough for many Australian families, small business owners and workers.  Spending time on your own budget and family protection costs you nothing but your time.

 If you are having trouble working out how to protect yourselves without forgoing other necessary needs or wants feel free to give our office a call or pass our details on to somebody you know who is risking it all.

Posted in Insurance

PARTNERSHIP PROTECTION – article by Paul Langdale LEA Insurance Brokers

I have set out below some pertinent points in relation to Partnership Protection: 

 I believe that your business venture is a partnership. The impact of one partner dying or becoming permanently disabled could have a catastrophic effect on the business as the remaining spouse/family may inherit a share in the business and the profits for no extra work. A worse case could be a husband and wife passing away and the share of the business going to the estate, where someone with little or no experience may in fact be entitled to a share of the profits and a share of the decision making with no input work-wise to the business.
 The best way to combat this is to have insurance on each partner for the value of their share of the business. This is then “tied up” with a partnership buy-sell agreement drawn up by a solicitor so as when a trigger event occurs e.g. death, the estate is entitled to the insurance proceeds in exchange for the deceased persons share of the business. In other words the funding is provided through life insurance and the agreement binds the estate to release the control of the business to the remaining partners.
Each client should own his/her policy subject to any agreement.
This advice is of a general nature only and the advice of a solicitor who is an expert in this field should be consulted.
I am happy to provide quotes if required in respect of insurance cover if necessary.
Paul Langdale   A.F.A .Dip IV FinPlanning (Integratec)
Lea Insurance Brokers
Authorized Representative
Millennium 3 Financial Services Pty Ltd
AFSL Lic. No 244252
Posted in Business, Insurance

Debunking the Myths about Insurance – article provided by Paul Pavlic / Ian Bostock

Myth 1.

I have enough insurance inside my super

 Unlikely. Remember that the minimum level of cover provided through your super fund is set with all members in mind. It is therefore unlikely to be exactly the level of cover you and your family needs and may not be enough to cover all or even just some of your debts, loans and mortgages. (Four our clients in Qsuper – once you leave your industry employment your insurance ceases, in addition your insurance is set to automatically decline with age.

 Myth 2.

I don’t need insurance, the Government will look after me if I get sick or injured

 This would be nice but it’s not really the case. Centrelink will pay a maximum disability pension of $695.30 per fortnight for singles and $524.10 (each) for couples (1). Would this cover your current lifestyle, loan payments and mortgage?

 Myth 3.

Workers’ compensation will cover me

 Not usually. Workers’ compensation only covers accidents or injuries that occur during working hours or for an illness that are the direct result of your employment. The majority of accidents and illnesses occur outside of the workplace. So if you want to protect your lifestyle and your family it’s unwise to rely on workers’ compensation alone.

 Myth 4.

 Life insurance is not affordable

 For most Australians insurance is very affordable. For example, a 35 year old male, non-smoker applying for $500,000 Life Insurance cover, the monthly premium would be approximately $30. A 25 year old female, non-smoker applying for $500,000 of Life Insurance cover the monthly premium would be approximately $25.

 Myth 5.

 Life Insurance Companies do not pay claims

 Insurers do pay claims. In fact life insurance companies pay out almost $10 million every working day in claims to clients (2). This figure would be even higher if Australians had adequate levels of cover.

 Myth 6.

Many people have to pay higher premiums or cannot get life insurance at all.

 Insurers are in the business of giving people access to insurance at an affordable price. If they failed to do this, they wouldn’t have a business. Data from the Investment and Financial Services Association (IFSA) indicates that around 93% of applicants pay standard premiums for their life insurance (3).

People who have a higher risk of developing chronic illness or who work in high risk occupations are usually required to pay an extra premium to cover this risk, but this only applies to a few people (the remaining 7% of applicants). And only a very small number are not able to be covered at all.

 Myth 7.

Most people have enough insurance

 Unfortunately, this is not the case. In fact, research shows that 60% of families with dependent children do not have enough insurance to cover the household expenses for a year if the family bread winner were to die (4). We also know that, on average, those that have death cover through their super policy have less than half the level of cover they need (5).

Ironically, most  Australians insure their homes and cars but less than a third insure their most valuable asset, their income. This causes unnecessary hardship for numerous Australians and their families.

A common myth – Insurance is too expensive

 A number of people think insurance is too expensive – until they need it. The premiums that these people paid were obviously worth every cent for both them and their family. The following are real claims from Zurich’s portfolio





Total Benefit Paid

Gross Premiums Paid**




Eye injury – left eye






Amputation of left hand





Occupational Therapist Consultant

Post viral fatigue











Sales Representative

Major Depressive Illness



Source: Zurich Life Risk Brochure – A small cost for a large benefit

Do you know if you are currently paying for stepped or level premiums on your insurance policy in super?

 Most clients will not be able to answer this question without seeking the assistance of a qualified adviser. Stepped premiums are deceptively cheaper now, however, rapidly increase in price over the long term. If your client’s objective is to hold cover until age 65 and they are in their 20’s, 30’s or 40s it may be more cost effective to implement level premiums.

 Do you know if your insurance cover inside of super is unitised and decreasing with age?

 Most clients will not be able to answer this question without seeking the assistance of a qualified adviser. Many industry super funds sing the praises of the ‘cheap’ insurance premiums to their members but fail to let members know that their insurance covers are decreasing with age.

 Does all of your insurance gradually expire on your way to age 65 and is that suitable to your personal circumstances?

 Most people prefer to know the levels of insurance cover they have rather than playing a guessing game if they ever need to make a claim.

 Will you have enough insurance cover if you need it?

 The majority of super funds issue default cover that is age based, unitised and decreasing with age. Your client may think they have enough Life, TPD & Income Protection Insurance cover inside of super, however, years down the track when an event happens they are often disappointed that the cover has been declining without their awareness.

 By making an appointment with a financial adviser, the client can obtain information how to obtain fixed levels of insurance cover that will not decrease with age, rather the client can choose to have the cover increase with inflation.

 Are you aware that our financial adviser can assist you to arrange for your insurance premiums for Life, TPD and Income Protection to be paid from your superannuation account if cash flow is an issue for you at this point in time?

 Most clients do not know that this is an option to overcome cash flow issues.

 Do you know what Trauma insurance cover is?

 Basically 80% of the population will die from a trauma event – the most common trauma events are – Heart attack, Stroke and Cancer. Yet only 3% of the population are covered for Trauma events.

Did you know that you can insure your children between the ages of 2-16 for Trauma events?

Most people say that their family is important to them, however, many clients are not aware they can insure their children for trauma events.

 What would you do if you lost your income due to sickness or serious injury and could not meet your mortgage repayments?

 Most clients do not have sufficient cash reserves or a plan B if they lose their income.

 It is always a good idea to run these scenarios by your licensed adviser as they may be able to apply for special terms on the following conditions.

  • Family health history (eg cancer, heart conditions)
  • Currently taking Prescription Medication
  • Are you Pregnant. Unfortunately, due the nature of this medical condition you are unable to apply for insurance until your baby is born.
  • Trail bike riding/hazardous sports
  • Mental health medication
  • Body Mass Index over 35
  • Time off work for depression
  • Currently on an insurance claim or law suit
  • Self Employed with ABN need 12months financials and Income Tax Return
  • Smokers generally pay double for insurance premiums
  • I am Bankrupt
  • I am a full-time international student
Posted in Income, Insurance, Investments