News Benefit of Having Both Total Permanent Disability (TPD) and Life Insurance

The Benefit of Having Both Total Permanent Disability (TPD) and Life Insurance

Insurance provider in Perth explains how a disability insurance scheme is benefitting many Australians who suffer from total permanent disabilities.

One of the main advantages to bundling is that you can work with one insurance agent and develop a plan that is both customised and comprehensive, without the inconvenience of managing multiple policies.

Bundling TPD and life insurance can be particularly beneficial if someone becomes totally and permanently disabled and then dies shortly thereafter. However, collecting TPD payments can often reduce the life insurance benefit. For example, if you have $500,000 worth of TPD cover and $1 million in life insurance, collecting the $500,000 for TPD will change your payout for life insurance to $500,000 with a standard policy.

TPD Buyback and Double TPD

Some policies allow the user to “buy back” whatever life cover was affected by collecting TPD money. Restrictions vary from policy to policy.

Other policies have a “double TPD” feature in which there is no life cover reduction when collecting TPD. In addition, some policies state that a buyer who collects TPD is no longer responsible for paying the premiums on their life insurance.

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News Have a Sound SMSF Investment Strategy

Self-Managed Super Funds: Why It is Important to Have a Sound SMSF Investment Strategy

A sound SMSF investment strategy can go a long way towards providing peace of mind and a prosperous retirement.

Many Australians are taking advantage of the opportunity to set up their own SMSFs. However, this can be a double-edged sword. While a brilliantly-maximised SMSF can provide a prosperous lifestyle during retirement, mistakes in strategy can cost thousands of dollars. Due to the highly-regulated nature of SMSFs, it is our belief that one should always seek the help of professionals who are trained in the regulations and in maximising investments such as an SMSF.

To manage an SMSF, you must register as a Trustee. One of your mandatory duties as an SMSF trustee is to formulate and document an investment strategy. This is a financial plan that takes into consideration the current and future needs of every SMSF member, even if you are the only member.

Every SMSF is required to pass a test from the ATO called a “Sole Purpose Test,” which requires all investments “to have the sole purpose of providing retirement benefits or death benefits to the Beneficiaries of the SMSF.”

One of the most-cited benefits of an SMSF is having control of your investments. The SIS Act requires all trustees to formulate, execute and document all investment decisions and to monitor their performance on an ongoing basis. The SMSF investment strategy is an essential and mandatory part of this process.

The Investment Strategy Dictates Investment Results

Since all investments in the SMSF must be invested according to the investment strategy, the strategy must be sound in order to produce optimum results. All factors must be considered in an SMSF investment strategy. This includes assessing risk against possible return on investment.

It also includes the composition and diversity of the investments and maintaining a degree of liquidity within the fund. The SMSF must also have the ability to discharge any existing liabilities.

Putting It All Together

A sound SMSF investment strategy will contain diverse investments such as property, shares and cash. The SMSF must be able to pay expenses and should be protected by adequate insurance. It must also be able to pass an independent audit conducted on an annual basis.

To learn more, call our financial planners in Perth: (08) 6462 0888.

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News What Your Financial Planner Can Do for You

What Your Financial Planner Can Do for You

Why financial planning is worth the fees you may pay for their services and how you can benefit from a great financial planner.

Hiring a great financial planner can make the difference between a prosperous retirement and a small nest egg, but many people don’t know exactly what a financial planner does. Here are some services you can reasonably expect from most financial planners.

Assess Your Financial Situation and Ask about Your Goals

Your first appointment, more of a “getting to know you” than a strategy session, allows the planner to know what you want and what resources you have at your disposal. He or she will compare your income and assets against your expenses and debts to gain an accurate picture of your situation.

During the first session, you can tell the financial planner what your goals are and together you can figure out how much money you need to attain them.

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News Don’t Skip Income Protection

Wishful Thinking Best Left to Others: Don’t Skip Income Protection

Why best case scenarios concerning income fail to protect your interests.

What is your biggest asset? Your home? Your business? Your yacht? No matter how many assets you have amassed, your biggest asset is your ability to earn income. Without the ability to earn income, the other assets are not possible unless you already have more money than you can ever spend.

Therefore, it is important to protect your biggest asset with income protection. Income protection cover protects you in the event you are unable to work due to injury or illness. Usually, it pays around 75% of your income until you can get back to work. Income protection cover is tax deductible and you can spend it on whatever you choose to spend it on.

Determining the Cost of Income Protection Insurance

Numerous factors go into determining the price of income protection insurance. Whether or not you smoke, your age, your gender, your occupation, your health, your income and the amount of desired coverage are all factored in to the price. Most people choose a financial planner to advise them on how much cover they need.

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News Consolidating Your Superannuation Funds

Consolidating Your Superannuation Funds: Where to Begin

Consolidating your superannuation funds can save money in fees that can be put back into the fund for your retirement.

If you have ever switched jobs, there is a good chance that you have superannuation funds sitting in two or more different accounts. This makes it more difficult to access your funds when you want to invest them and causes you to pay more money in administration fees.

Consolidating your super funds can provide easier access to funds and provide more money for your retirement. So, how do you start consolidating superannuation funds?

Check for a Lost Super Fund

The ATO has a service called “superseeker” which allows you to see if you have “lost” or forgotten about any supers. The Government has classified over 6 million super funds as “lost.” If one or more belongs to you, make sure to get your money back.

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News Total and Permanent Disability Insurance: What It is and Why You May Need It

Total and Permanent Disability Insurance: What It is and Why You May Need It

Total and Permanent Disability Insurance can keep you from depending on others if you are permanently disabled.

Nobody wants to think about what would happen if they were permanently disabled. A lot of people say, “it will never happen to me” and don’t think twice about it until they suffer a serious injury. Sadly, it could happen to you.

Ask yourself what would happen if you were suddenly unable to work. How would you live? Who would pay your bills? Do you have enough of a “nest egg” to take care of you if the unthinkable were to happen to you tomorrow?

With total and permanent disability insurance or TPD, you don’t have to worry about being broke and unable to work. So, what is TPD insurance?

What is Total and Permanent Disability Insurance?

TPD insurance is a policy that pays you if you suffer a permanent disability and are incapable to work; the disability can be caused by injury or illness. The policy is designed to compensate for lost income and to help you pay for extra medical and rehabilitation expenses that aren’t covered in your health insurance.

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News Setting up Your Self-Managed Super Fund

10 Steps to Setting up Your Self-Managed Super Fund

At Approved Financial Planners, we work with a lot of self-managed superannuation funds (SMSFs). The biggest advantage of a self-managed super fund is that you can invest your money the way you want to. However, if you don’t have the right professionals guiding you, this advantage can turn into a disadvantage.

There is a fair amount of work involved in setting up a SMSF, but you only have to do it once. Here are some of the steps involved. Remember that every situation is different and that you should always work directly with a professional when setting up an SMSF.

Obtain Consent from Directors and Trustees

Obtain written consent from trustees and directors of their appointments to their positions and full awareness of the responsibilities thereof.

SMSF Bank Account

Your SMSF will need a bank account to establish it as a trust. This will usually require a small deposit.

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News Deeming Rules for Age Pension

How Will Potential Changes to the Age Pension Affect Your Retirement?

New regulations regarding deeming rules for Age Pension took effect on 31 March of this year. For many Australians, the new deeming regulations will decrease the amount they can collect on Age Pension. For the purposes of this post, we will try to simplify the analysis of the changes.

What is Deeming?

If you own investments, such as term deposits or shares, the Government uses a formula to “determine” your “earnings” from them and counts that number as “assets” on your Age Pension income test. This “income” is called “deemed income.” Deemed income assumes that you are making a certain amount of income on your investments; deemed income may be more or less than you are actually making.

How Superannuation Funds are Currently Assessed

The current formula for counting superannuation pensions against the Age Pension income test counts both the account balance and return of capital of your super fund.

For the Age Pension income test, any income stream that you are now taking from your super fund is counted by a formula that counts what you have received for the year and then subtracts a deduction amount. The deduction is to ensure that income isn’t counted on both the income and assets tests.

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News SuperStream Changes for SMSFs

Is Your Small Business Ready for the SuperStream Changes for SMSFs?

On 1 July 2014, superannuation fund payments will be made electronically using the new SuperStream system. According to the Australian Taxation Office, the new system has been introduced to assist employers in making their contributions in a more efficient, timely and consistent manner into a member’s account. SuperStream simplifies the process by which funds are deposited by providing the common standards that are lacking under the current system.

Members will be required to ensure that their SMSF bank accounts are set up to receive electronic payments and messages containing information about contribution payments. One projected benefit is that record-keeping will be improved for the purposes of taxes and auditing.

On the deadline date, all employers with twenty employees or more will be required to send all payments and contribution data through SuperStream. Smaller businesses, with 19 or less employees, will have an extra year (until 1 July 2015) to become compliant with SuperStream.

Employees of small businesses will be required to update their information with their employers by 31 May 2014. This includes the Australian Business Number (ABN) of their SMSF, the bank account in which their SMSF receives contribution payments and an electronic service address where receipt of contribution messages can be received.

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News Maximising Your Investment Property Rental Returns

Maximising Your Investment Property Rental Returns

With vacancies on a slight rise and rents plateauing in most areas around Perth, many property investors are focusing on finding properties that they can improve to create more revenue from rent.

Using your Property to Increase Revenue

Those who invest in rental properties are investing not only in property, but in lifestyles. People have different expectations when they rent properties. Some want to be in the inner ring of suburbs where they are close to more amenities and to the CBD. Many are willing to pay higher rents for homes that are fit and furnished to a higher quality.

For example, a dishwasher, security and air conditioning are seen by many renters as essentials on the middle to upper end of the rental market. A split reverse cycle air conditioner allows tenants to both heat and cool their property, depending upon need. These three improvements alone can increase rent by as much as $40 per week and decrease vacancy time due to increased demand.

Outside appearance is another factor in the allure of a rental property. A well-maintained garden can make a big difference in rental and vacancy. Many landlords are contracting gardeners to keep their grounds attractive and building the expense into the rent.

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