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Insurance tax reforms to be discussed

The Federal Government made a move to put insurance taxes back on the national tax reform agenda, stating that it is an inefficient means to gather revenue.

The decision to discuss the state-imposed taxes in the October tax forum, which will examine the nation’s taxation system, has been hailed as a positive step towards making insurance affordable.

In comparison to other countries Australia has high taxes on insurance, with states having taxes on almost every general and life insurance policy.

Although the taxation rate hasn’t increased, insurance taxes have been a growing source of revenue for the states due to increased premiums, raising about $4.6 billion in 2009/10.

However, many feel that insurance taxes are an inefficient way of raising revenue and disproportionately impact on some sections of the community, such as those on low incomes.

There are worries that increasing the price through the imposition of a tax on insurance premiums will lead to some people either not insuring or underinsuring.

It is widely felt that insurance is a community benefit that should not be subject to penalty taxes, and the benefits to Australian households from the reform of state transaction taxes will be significant.

Alternative revenue sources for removing all stamp duties including a better payroll tax system, improved land taxes and adjustments to the GST will also be considered.

The tax forum will be held on October 4-5.

Why should you invest in life insurance?

Whilst the majority of people wouldn’t think twice about insuring their home or car, personal risk protection is often perceived as expensive and unnecessary. In the current economic climate many Australians are hesitant to invest in life insurance.

However, a large number admit they would encounter difficulties should the major breadwinner of the household suffer an unexpected injury, illness or death and be unable to provide for family members for a span of longer than three months.

If you are the major breadwinner, you should seriously consider investing in life insurance if there are those dependant on you financially who would struggle to cope if you were unexpectedly unable to work (i.e. if you do not have a large store of funds saved). In this event life insurance would provide financial stability for your spouse and family in the absence of your primary source of income and ensure they are not left unable to fulfill such financial commitments as bills and mortgage repayments. It would also ensure your children had access to funds to help them pay educational expenses such as university tuition fees.

The average cost for a funeral service is in the region of $4000-$6000, an amount can be crippling for households left in a less than financially secure position.  Life insurance would ensure that in the event that you were to suddenly pass away, all funeral expenses would be taken care of, easing the burden for those left behind.

The practical uses of life insurance also extend further than providing a death benefit to surviving family members. Coverage can also apply for instance if another family member suffers an injury and must be taken care of, if a child is born or if the insured must care for an elderly parent or family member.

In short, life insurance is valuable simply for the peace of mind it grants – the knowledge that if something were unexpectedly to happen to you your family would not be left in financial hardship without means of providing for themselves.

Why we all need life insurance!

You don’t have life Insurance? What are you waiting for? There is no wrong time for life insurance, every generation should make sufficient protection a priority, whether you are in your 50’s or your 20’s life insurance is a crucial element in ensuring that you are properly protected. Life insurance can give you piece of mind knowing that your family and debts will be taken care of.

Life Insurance is one of those things that we all need and although none of us like to think that we will ever have to use it. The same way we think about protecting our homes and our cars we need to start thinking about protecting our lives too, no matter what age you are or what your financial situation happens to be.

Generation Y should have a life insurance policy as soon as they have any debts or dependants. The amount of life insurance that you will need is based on the amount of debt, the number of dependants and your asset portfolio. If you are single with no partner, no debts and no dependants, getting a life insurance policy may not be in your plans though as soon as your situation changes it is crucial that you are protected.

If you are part of Generation X and already paying bills finding it hard to make ends meet with all the bills and expenses life insurance is a must. Life insurance when you are under the age of 50 is not an extreme expense though it will give you a large degree of peace of mind to know that your family will be looked after if something where to happen to you. Life insurance will help your family maintain their lifestyle as well as helps them with expenses such as mortgage repayments.

If you are a Baby Boomer life insurance definitely needs to be a priority, you must consider what would happen if you’re gone. Will your family be able to maintain mortgage repayments or household expenses? What about your children’s education expenses? This is definitely a time when life insurance is necessary.

No one knows what the future may bring but its best to gear up for the things that may happen by applying for life insurance, contact one of our eChoice Insurance consultants for more details.

Make Life Insurance your New Year’s resolution

A study by the Australian Securities and investment Commission (ASIC) has found that as many as 80% of consumers in Australia are underinsured with many Australian’s not having any life insurance at all.

Whilst there are general New Year’s resolutions such as drinking less alcohol, losing weight, to quit smoking and saving money, you should also add having an appropriate life insurance policy to your list of resolutions. If there have been significant changes to your life in 2010, such as marriage, birth of children, employment changes, divorce or retirement, reviewing your life insurance policy is essential.

There are though other reasons why you should regularly review your life assurance which can result in major benefits which could include big savings for you and your family. Life Insurance allows for piece of mind for you and your family and ensures your family will be properly looked after should something happen to you.

Insurance should be part of the bigger picture when you are reviewing your finances, now is the perfect time to review your life insurance policy or to get a life insurance policy and ensure you begin 2011 properly protected.

Why you need Life Insurance?

Life insurance needs will vary depending on your situation. If you have dependents or generate a significant portion of your family’s income, you most likely need life insurance.

The amount of life insurance you need will again depend on many factors such as how many dependents you have, your debt, your source of income and your lifestyle. If your salary is important in supporting your family in terms of mortgage repayments, bills, education costs and anything else that would need to be covered in the event of death.

The cost of life insurance will vary greatly depending on how much you buy, the type of policy you choose, the insurance provider’s practices and regulations. Most insurance providers will use a table to predict you life expectancy based on information that you provide.

Consumers must be cautious of hidden costs in life insurance policies, such as fees and commissions that could be uncovered only after you purchase the policy. There are many types of life insurance policies and a lot of lenders out there. It easy to be confused therefore it is recommended that you shop around.

eChoice insurance provides a free life insurance health check. So if you do have a policy that you’re confused or unsure about or are looking at taking out a new policy, contact one of our insurance consultants.

For a limited time, we are have an exclusive offer for our eChoice clients – with any life insurance policy you take out, you will receive 20% cash back. We can help you make the right decision by comparing from a wide range of insurance providers.

Australia under Insured

Australia is one of the most under insured countries in the developed world. There are approximately 4.5million working parents in Australia, of those an expected one million will suffer a serious accident, illness or death.

Australians who are under insured will see their family’s income drop by half if a tragic event occurs, and will struggle to meet mortgage repayments and pay their bills. This leaves those hit by misfortune to rely on  inadequate government payments.

Of all the families with dependent children who are insured, 60 percent do not have enough life insurance to look after them for even a year if they are no longer able to work .

Only 22 percent of Australians actually have life insurance and the few who do  are extremely are under insured. The average cover is $210,976, which is less than a third of what is actually required for sufficient cover, estimated to be $670,621. Under estimating the importance of life insurance could prove extremely detrimental to individuals and their families.

Life Insurance – How Much Do I Need?

Life Insurance – How Much Do I Need?

In estimating the amount of life insurance that you’ll need, you need to think about a needs approach or the replacement income approach. Under the needs approach, the life insurance will be calculated according to the financial needs that your family will need when you die. On the other hand, the replacement income approach is calculated on the income that your family will lose.

With the needs approach, you must find the sum of all the amounts that will represent the needs of your family after your death. These needs include funeral and burial expenses, uninsured medical bills and estate taxes.

This approach also includes the tuition of your children, personal or business debts and expenses on food and housing over time. Yet since the job of identify the needs of the family is difficult, it can also be limit you.  Also, the true needs of your family and the privileges that you want for them are hard to differentiate.

For the replacement-income approach, the amount of insurance is based on the amount of earnings that would cover your family’s needs years after your death. Approximately, the replacement income is four or five times greater than the annual income although there are more precise estimation considerations In accordance with your family’s annual needs.

This estimate considers the number of years that your family is going to need the benefit payment and the interest rate that the family will earn from the proceeds. You must also consider that Social Security provides benefit payments as well so you need not get a big benefit payment from the life insurance.

Calculating the benefit payment using the replacement-income approach is easy. If you have a job that earns you $50,000 a year and you want that amount to be covered for 15 years while your family earns five percent out of the life insurance benefit payment, you would need about $20,000 of life insurance for 15 years so replace the $50,000-a-year income.

You can also include inflation in the calculation for the replacement-income approach. Take for example the situation presented above but figure in an inflation of 2%, it would give you $518982.90 or about $600,000 which makes it $750,000 given the inflation.

Life Insurance Tips

Life Insurance Tips 

When choosing life insurance, you should talk to your family.  Don’t just limit the insurance to the highest income earner in your home and check the life insurance that you may currently have through your super fund.   Read the product disclosure statement that contains the description, benefits, limitation and fees that the policy has. You might find it doesn’t have the cover to suit your needs. 

When you have determined the cover that you need, you must need to compare insurance policies and find the best deal for you.  Once you’ve selected your life insurance , you should always disclose any health problems in the application form.  If you don’t declare these, the insurer might not pay for claims related to it. You must also check if the product is inflation-indexed so that it can keep up with your cost of living. It is also important to find out insurance restrictions in terms of age and profession.  

To get the most out of your life insurance, you must carefully decide how much you need. Make sure that the life insurance policy that will get is enough to take care of your family should you pass away.  Consider payment for existing debts and funds for their expenses until they can make their own income. Since life insurance has a competitive market, price is important. Compare prices from several insurance companies to make sure that you will get the best value for your money.Also, you must update your life insurance coverage so that it will keep up with your way of living. Life changes constantly and there can be dramatic changes in how you live your life. Buying a house, getting married and having a family and eventually having kids all mean you need to review your life insurance cover.Of course, don’t sign anything unless you understand it fully. 

Life insurance offers peace of mind

Life Insurance

Life Insurance is a lump sum payment that the dependants of a deceased insured person will receive. This money can be used for burial expenses or for debts that the deceased person has left. The insurance money can also be used for investments and other personal expenses.

It’s important for a lot of reasons.

• If you pass away it pays out all your debts
• The best time to take it is when you are young fit and healthy as the premiums will be lower
• It will look after your family
• Peace of mind

The life insurance premium relies on a lot of factors, including risk factors in your line of work and lifestyle. They also consider personal health histories such as smoking and drinking.
Many super funds include a life policy but you check if the default cover satisfies your family’s needs. You can ask for a statement which reflects the amount of your insurance and a product disclosure statement which details the policy guidelines. Also, check if the policy has restrictions for dangerous work, part-time work, maternity leave and age.

If you apply for separate cover make sure you get the right mix. While the premium of the term life insurance is not tax-deductible, the benefit payout is tax-free. Also, the cover is renewable once your term life insurance is active. This means that the benefit will only stop if you stop paying the premium. If you have suffered an injury or illness, your cover is still active.

It is important to find the insurance deal that will cover the needs of your family. To do this, you can consider how long your financial commitments will last. Then, you can seek the help of a financial adviser who will determine the right term for you based on your existing debts, the future costs for education of your children, your current income and potential purchases in the future.