Explanatory Terms

Term Life Insurance

Term Life Insurance provides a lump sum payment to your nominated beneficiaries, should your death occur during the term of the policy (subject to the terms of the policy).

Term Life Insurance pays a lump sum Benefit if the Insured Person dies or is diagnosed with a Terminal Illness which will most likely result in death within 12 months of being diagnosed. The benefit received can help meet funeral expenses, secure your family’s future through the creation of an estate, repay your mortgage and other debts, and protect your business or cover key business expenses.

An important aspect in planning for your retirement and building financial security is to ensure that you and your loved ones are protected against the unexpected.

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Total and Permanent Disability Insurance (TPD)

TPD can help to maintain a comfortable standard of living for yourself and help to maintain your family’s lifestyle in the event of your disablement. The definition and application of TPD varies from insurer to insurer. However, three general variations are applied. Naturally the more generous the benefit, the more expensive the cover.

The variations relate to the insured’s inability due to disability to perform:

• their usual occupation;
• an occupation for which they are qualified by reason of education, training and experience;
• any occupation.

Term Life Insurance & TPD provide a lump sum payment in the event of your death or disablement. A calculation of your insurance needs may include

• providing your surviving family with a continuing income
• paying off your existing debts

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Trauma Insurance

With the advances in modern medicines, more and more people are now surviving major traumas such as heart attack, cancer, coronary artery surgery etc. However, the recovery period and the cost of care associated with such illnesses normally places financial strain on the person suffering the illness.

For this reason “Trauma Insurance” or “Crisis Care” provides insurance cover for specified events that may include events such as Coma and Coronary Artery Surgery. This insurance typically pays a lump sum to the insured person upon diagnosis of one of a number of specified conditions.

Such a payment will help you and your dependants in such situations to provide financial security. While the payment may be used in any way that you like, you may wish to pay for medical expenses not covered by Medicare or your health fund, to clear any liabilities you may have, or to take care of other bills and expenses.

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Income Protection

As income is generally seen as our biggest asset, it is extremely important that this asset is protected. Income Protection is designed to replace income in the event of illness or accident, which means less strain on savings, investment income and other assets.

The maximum permissible cover is typically 75% of your personal exertion income (including salary sacrificed superannuation contributions). It is extremely important that any income protection policy recognises and covers your applicable employment structures and circumstances.

Benefit periods for this type of insurance vary and as such alter the premium of policies. Typical benefit periods range from 2 years, 5 years, to age 55, 60, 65 and Lifetime.

The waiting period before benefits are paid will also alter the premium for income protection insurance. A short waiting period is generally designed to suit those who could be in financial difficulties very quickly if their income stream stops. Your sick leave and annual leave entitlements should be taken into account in deciding the appropriate waiting period. Varying benefit periods and waiting periods can be structured to suit your needs

If an appropriate claim were made then this indexed income would be payable providing you continue to meet the conditions of the agreement.

The annual premium for this cover, assuming acceptance, is fully tax deductible.

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Business Expense Insurance

Business overhead or business expense insurance is designed to cover the usual fixed expenses incurred in maintaining a small business in the event the life insured is unable to work due to an injury or sickness. It is normally only payable for up to 12 months and is useful for self employed persons or those operating small businesses where the business relies solely or predominantly on the revenues generated by a key person to meet those expenses. Depending on the policy provider, the policy can be written on a “stand-alone” basis and does not have to be taken out in conjunction with Income Protection.

Business expenses are usually defined as:

• Business mortgage or loan interest payments.
• Electricity, gas, water, heating, telephones, cleaning.
• Business property rates and taxes.
• Non-income producing employees' salaries and costs relating to those salaries eg superannuation.
• Other fixed expenses.

Business expenses do NOT include:

• Salary, fees, drawing account or any other remuneration for the principal or a replacement of a member of the family or anyone who is not an employee.
• Salaries for employees who generate income.
• Cost of goods or equipment used in the business.
• Depreciation of real estate or payments of principal of mortgages or loans.

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Enduring Power of Attorney

Should you become disabled and not have the capacity to make decisions, it will provide your nominated attorney (e g. relative, trusted friend or legal representative) with the power to act on your behalf in managing your affairs. If you become incapacitated without an Enduring Power of Attorney in place, Government Authorities can step in and administer your affairs. As a rule, you may consider nominating a Power of Attorney who is likely to survive you.

Your Power of Attorney can be reviewed on a regular basis in consultation with your legal representative.

Medical Power of Attorney – NSW legislation provides for a medical power of attorney and you can confirm with your legal representative whether this is relevant to your situation.

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FUTUREPROM Pty Ltd  |  Unit 1/300A Burns Bay Road, Lane Cove, Sydney NSW
P: 02 9428 1370  Mobile  0412 575 526 |  E: info@futureprom.com.au
ABN 96 398 071 419  |  Authorised Representative Number: 258204  |  AFSL No.:312478
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