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Managing the cost of insurance

Managing the cost of insurance

Life insurance policies don’t have to cost an arm and a leg. Here are tips for making them more affordable.

Cost is a common reason people cite for not having adequate life insurance cover or for cancelling their insurance policies. But you can manage your insurance premiums to ensure you and your loved ones are sufficiently covered.

Choosing a payment structure

Choosing stepped premiums in the first few years of your life insurance policy may help you keep the cost of cover low in the beginning. Stepped premiums allow you to start paying your insurance at a lower rate, which then rises as you grow older. Your insurer calculates your premiums on each policy anniversary based on your age.

As your capacity to pay improves, you may consider shifting to level premiums. The level payment structure may offer a good long-term option because the insurer calculates premiums based on your age when you first take out the level premiums.

Getting cover through super

Another way to manage insurance affordability is to take out cover through your superannuation fund. This can lower the cost of some insurance policies as premiums may be paid using concessionally taxed contributions to your super. The premium rates may also be cheaper because super funds bulk buy insurance policies.

However, super funds may give you limited cover – both in terms of the types of policy and the level of coverage they provide.  Seek guidance from your adviser on how to ensure you have enough cover.

Keeping income protection cover affordable

When it comes to income protection insurance, there are a few ways you can manage the cost of your policy, including choosing a longer waiting period. The longer you wait before receiving benefits after being unable to work due to illness or injury, the lower your premiums.

You can also choose between indemnity and agreed value policies for your income protection insurance. Under an indemnity policy, your insurer bases the monthly benefit you would be paid on your income at the time you make a claim. For an agreed value policy, the benefit is based on your income when you apply for coverage. Opting for indemnity cover may help you keep the costs down because premiums are generally lower than for agreed value cover. But indemnity policies may vary among providers so it’s important to speak to your adviser about which cover suits you.

Income protection premiums are usually tax deductible if you fund your cover outside super, helping make this policy affordable. If your policy provides both income and capital benefits, only the premiums attributable to the income benefit are deductible.  Premiums paid through your super are generally tax deductible to the super fund.

Seeking help

Clearly, there’s a lot to consider. Seeking advice from a professional financial adviser could help you review your options and manage the costs of your life insurance without sacrificing the adequacy of your cover. Together, you could develop strategies to make insurance affordable while ensuring you and your loved ones have sufficient protection.

 

This editorial and the information within, including tax, does not consider your personal circumstances and is general advice only. It has been prepared without taking into account any of your individual objectives, financial solutions or needs. Before acting on this information you should consider its appropriateness, having regard to your own objectives, financial situation and needs. You should read the relevant Product Disclosure Statements and seek personal advice from a qualified financial adviser. From time to time we may send you informative updates and details of the range of services we can provide. If you no longer want to receive this information please contact our office to opt out. The views expressed in this publication are solely those of the author; they are not reflective or indicative of Licensee’s position, and are not to be attributed to the Licensee. They cannot be reproduced in any form without the express written consent of the author. RI Advice Group Pty Limited ABN 23 001 774 125, AFSL 238429.

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Saving for retirement when you have dependants

Saving for retirement when you have dependants

 Supporting your dependants doesn’t have to come at the expense of building your retirement nest egg.

Preparing for retirement can be difficult for parents who have dependent children to support. They may find themselves torn between saving for retirement and setting aside money for their children’s education or other needs. Even adult children ask their parents for financial help; one survey found that more than half of Australians aged 18 to 35 borrow regularly from their parents, including to get help with big purchases or university fees.[1]

However, you don’t have to sacrifice building a retirement fund while supporting your children. There are ways to build a sufficient nest egg while helping or providing for your dependants.

Saving for your golden years

Forced saving can be your good ally in building your retirement fund. Voluntary contributions to your superannuation through salary sacrifice may help boost your nest egg. It may also help you reduce the amount of income tax you pay. Including your employer’s super guarantee contribution, you can make concessional super contributions of up to $25,000 each financial year. The government will tax your salary-sacrificed contributions at 15 per cent, which could be much lower than your marginal tax rate.

It may also be worth looking at how and where your super fund invests your money. Choosing a different investment option or type of risk may help you earn better returns and grow your super.

Super can be a difficult subject to get your head around. It may help to speak to your adviser about how you can boost your super by making voluntary contributions or changing your investment option or level of risk. Your adviser can also take you through the tax implications of voluntarily contributing to your super.

Outside of super, there are options that may help you save for retirement, such as buying an investment bond or investing in a managed fund. You should seek advice before you decide if these options might work for you.

Protecting your income

While building your fund for old age and supporting your dependants, it’s important to make sure you are protected against the risk of losing your current income. A sudden illness or injury can keep you from working and earning the income you need to provide for your dependants and save for your retirement. Taking out income protection insurance is a wise precaution against such illness or injury. If something happens, this policy may provide you a monthly income to support you and your family during your recovery and help you stay on track with your financial commitments.

It is also critical to ensure your dependants are looked after if you die or become seriously ill or disabled. A life insurance policy may pay a specified amount to your beneficiaries when you die, offering a financial buffer even though you’re no longer around to provide for them. You may want to consider adding total and permanent disability cover to your life insurance in case you’re unable to work due to a permanent disability. The policy may provide a lump sum to help you defray the costs of rehabilitation and cover your family’s living expenses if you became totally and permanently disabled.

Adding trauma insurance to your life cover can also protect you and your dependants from financial hardship if you are diagnosed with an illness or injury that is covered by the policy. Trauma cover may provide a lump sum benefit or equivalent instalments to help you pay for medical and living expenses while you recover.

Get professional advice

Making financial decisions for your retirement while supporting or providing for your dependants can be tough. But you don’t have to do it alone. Your adviser can help you assess your current situation and develop a strategy to support your dependants while building a nest egg for a comfortable retirement.

                                    

This editorial and the information within, including tax, does not consider your personal circumstances and is general advice only. It has been prepared without taking into account any of your individual objectives, financial solutions or needs. Before acting on this information you should consider its appropriateness, having regard to your own objectives, financial situation and needs. You should read the relevant Product Disclosure Statements and seek personal advice from a qualified financial adviser. From time to time we may send you informative updates and details of the range of services we can provide. If you no longer want to receive this information please contact our office to opt out. The views expressed in this publication are solely those of the author; they are not reflective or indicative of Licensee’s position, and are not to be attributed to the Licensee. They cannot be reproduced in any form without the express written consent of the author. RI Advice Group Pty Limited ABN 23 001 774 125, AFSL 238429.

[1] Canstar, ‘50% of Gen Y Relying on the Bank of Mum & Dad’. Available at: https://www.canstar.com.au/youth-banking/50-gen-y-relying-bank-mum-dad/.

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Intergenerational Wealth – September 2018 Market Wrap

September 2018 Market Wrap

Welcome to the latest edition of our client newsletter,

Our articles cover a range of topics which we hope you will find interesting. We aim to keep you informed of changes as they happen, but we also want to provide ideas to help you live the life you want, now and in the future.

Wall Street leads shares higher

  • Global shares rose 1.5% and 4.1% in hedged and unhedged terms respectively. Developed markets remained solid, while emerging market shares remain under downward pressure.
  • Global share returns were pushed higher by strong returns to US shares. The S&P 500 rose 3% supported by strong earnings.
  • Meanwhile major bourses in Europe fell as political risks in Italy and trade war concerns dominated sentiment.
  • Trade tensions and the strong US dollar continued to weigh on emerging markets. The MSCI Emerging Markets index was flat.
  • Despite the leadership spill locally, Australian shares performed strongly with the market supported by a solid reporting season and signs that the RBA will be on hold for some time.
  • US Fed Chairman Powell indicated that considerable uncertainty is attached to the underlying economic drivers. The Fed will watch the data flow and are not necessarily set on a pre-determined tightening path. Markets expect another rate rise in September.
  • In Europe, the Bank of England voted unanimously to raise rates by 25 basis points to 0.75% as employment is at a record high and real wages are picking up.

Major asset class performance (%)

Asset classes 1 month 12 months 5 years (p.a.)
Australian Shares 1.4 15.5 8.9
Global Shares (hedged) 1.5 14.7 13.3
Global Shares (unhedged) 4.1 24.3 15.1
Global Emerging Markets (unhedged) 0.0 8.9 9.5
Global Small Companies (unhedged) 5.1 27.7 16.3
Global Listed Property 1.8 7.5 11.0
Cash 0.2 1.9 2.2
Australian Fixed Income 0.8 3.8 4.5
International Fixed Income 0.3 0.8 4.9
Source: JP Morgan & ANZ Wealth, 31 August 2018.Indices: Australian Shares – S&P / ASX 300 Accumulation, Global Shares (hedged/unhedged) – MSCI World ex Australia Net, Global Emerging Markets – MSCI Emerging Markets Net in AUD (unhedged), Global Small Companies (unhedged) – MSCI World Small Cap ex Australia, Global Listed Property – FTSE EPRA/NAREIT Developed Rental Index ex Australia (hedged), Cash – Bloomberg Bank Bill, Australian Fixed Income – Bloomberg AusBond Composite 0+ Yr Index, International Fixed Income – Barclays Global Aggregate Bond Index (hedged).

Please note: Past performance is not indicative of future performance.

Currency

Exchange rates At close on 31/8 % change

1 month

% change 12 months
AUD/USD 0.72 -3.2 -9.5
AUD/euro 0.62 -2.4 -7.1
AUD/yen 79.8 -3.9 -8.7
Trade weighted index 62.2 -2.1 -6.2
Source: Bloomberg & ANZ Wealth, 31 August 2018. All foreign exchange rates are rounded to two decimal places where appropriate.

Please note: Past performance is not indicative of future performance.

All the best,

Emilio and the team at Intergenerational Wealth

Disclaimer:

This information is current as at 31 August 2018 but is subject to change. This information is issued by OnePath Funds Management Limited (OFM) ABN 21 003 002 800 AFSL 238342. OFM is a wholly owned subsidiary of Australia and New Zealand Banking Group Limited (ANZ) ABN 11 005 357 522 but is not a bank. The information is general in nature and does not take into account a potential investor’s personal needs, objectives and financial circumstances. This information is not to be construed as investment or financial product advice, and should not be relied upon as a substitute for professional advice. Before acting on this information, potential investors should consider the appropriateness of the information, having regard to their objectives, financial situation and needs. Potential investors should read the relevant Product Disclosure Statement (PDS) available at onepath.com.au and consider whether the particular product is right for them. Although all the information in this document is obtained in good faith from sources believed to be reliable no representation of warranty, express or implied is made as to its accuracy or completeness. Whilst care has been taken in preparing this material, ANZ and its related entities do not warrant or represent that the information, opinions or conclusions contained in this document (“information”) are accurate. To the extent permitted by law, ANZ and its related entities do not accept any liability from the use of the information. Past performance is not indicative of future performance. The value of investments may rise or fall and the repayment of subscribed capital is not guaranteed. RI Advice Group Pty Ltd ABN 23 001 774 125 AFSL 238429.

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Budget proposals & It’s a boy!

Budget proposals

Hi All,

The below link is our analysis of the recent Government budget that was announced.

As always, feel free to pass this onto family and friends. Also, if you have any questions on any of the budget proposals, feel free to contact Emilio.

2018-19 Federal Budget client briefing

 

It’s a Boy!

We would like to take this opportunity to announce the safe arrival of our Director/Senior financial planner Emilio Bangit’s first baby boy Kobe Cruz.

Born on the 18th of April weighing 6 pounds and 8 oz. Below is a photo of their bundle of joy!

 

Yours Sincerely,

Emilio and the team at Intergenerational Wealth

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Intergenerational Wealth – March 2018 Newsletter

March 2018

Welcome to the latest edition of our client newsletter,

Our articles cover a range of topics which we hope you will find interesting. We aim to keep you informed of changes as they happen, but we also want to provide ideas to help you live the life you want, now and in the future.

In this edition we discuss the pros and cons of investment bonds and provide you with information on new legislation aims to benefit first home buyers and downsizers and Australians reveal their priority goals.

If you would like to discuss any of the issues raised in this newsletter, please don’t hesitate to contact us.

In the meantime we hope you enjoy the read.

Intergenerational Wealth – March 2018 Newsletter

 

All the best,

Emilio and the team at Intergenerational Wealth

Tanya Harber No Comments

Intergenerational Wealth – February 2018 Newsletter

February 2018

Welcome to the latest edition of our client newsletter.

Our articles cover a range of topics which we hope you will find interesting. We aim to keep you informed of changes as they happen, but we also want to provide ideas to help you live the life you want, now and in the future.

In this edition we discuss managing your money when you move in together and provide you with information on what to do when you come into money and a growing family doesn’t have to blow the budget.

If you would like to discuss any of the issues raised in this newsletter, please don’t hesitate to contact us.

In the meantime we hope you enjoy the read.

Intergenerational Wealth – February 2018 Newsletter

 

All the best,

Emilio and the team at Intergenerational Wealth

Emilio Bangit No Comments

Intergenerational Wealth – Financial Snapshot – Correction time for shares?

Correction time for shares?

Key points

– The US share market is long overdue a decent correction. This now appears to be unfolding and may have further to go as higher inflation, a slightly more aggressive Fed and higher bond yields are factored in.

– This will impact most share markets including Australian shares.

– However, in the absence of an aggressive 1994 style back-up in bond yields or a US recession – neither of which we expect – the pull back in shares should be limited in depth and duration to a correction (with say a 10% or so fall) and shares should have positive returns this year as a whole.

– However, it’s likely to be a more volatile year than last year.

For further information, please refer to the link below.

AMP Chief economist correction-time-for-shares (Feb 2018)

 

Yours Sincerely,

Emilio and the team at Intergenerational Wealth

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Intergenerational Wealth – January 2018 Newsletter

January 2018

Welcome to the latest edition of our client newsletter.

Our articles cover a range of topics which we hope you will find interesting. We aim to keep you informed of changes as they happen, but we also want to provide ideas to help you live the life you want, now and in the future.

In this edition we discuss Add some extra cash to your New Year and provide you with information on Sports lovers enjoy better financial fitness and The year that was and the year ahead.

If you would like to discuss any of the issues raised in this newsletter, please don’t hesitate to contact us.
In the meantime we hope you enjoy the read.

Intergenerational Wealth – January 2018 Newsletter

 

All the best,

Emilio and the team at Intergenerational Wealth

Emilio Bangit No Comments

Intergenerational Wealth – December 2017 Newsletter

December 2017

Welcome to the latest edition of our client newsletter,

Our articles cover a range of topics which we hope you will find interesting. We aim to keep you informed of changes as they happen, but we also want to provide ideas to help you live the life you want, now and in the future.

In this edition we discuss 12 ways to enjoy summer without spending a fortune and provide you with information on one in three Aussies travel without protection and is your insurance overdue?

If you would like to discuss any of the issues raised in this newsletter, please don’t hesitate to contact us.
In the meantime we hope you have a wonderful Christmas, and enjoy a the read.

Intergenerational Wealth – December 2017 Newsletter

All the best,

Emilio and the team at Intergenerational Wealth

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