Protecting your entire family (especially in retirement)

You’ve saved hard to build your retirement nest egg.You should be able to spend the money on a well-earned relaxing lifestyle. But all this could be put at risk if your adult children don’t have their own financial affairs well managed, particularly adequate insurance protection.

It’s human nature to assume that bad things only happen to others. Unfortunately this approach means that many people are unprepared financially for their future if sickness, accident or injury strikes. This often results in other family members having to bear the costs of supporting them.

For those close to or in retirement who are placed in this position, the financial impact can be devastating. 

Could this happen to you?

Let’s consider the example of Gary and Roslyn, both 61, who have one child, a 30-year-old daughter Janet. Gary and Roslyn are retired with an investment portfolio valued at $700,000, paying them an annual income of around $48,000. They also own their home, valued at $650,000.

Gary and Roslyn were enjoying trips away and spending time with their extended family members overseas until their lives dramatically changed when Janet was badly injured in a car accident. Janet was in hospital for almost three months, requiring another nine months of rehabilitation before she was able to return to work. 

Janet’s sick leave ran out after the first fortnight, and as she had no insurance cover in place, she had no income to pay the mortgage on her apartment ($2,500 a month) or other essential costs, including her mounting medical expenses.

As they didn’t want Janet to have to sell her apartment, Gary and Roslyn needed to draw on investment capital from their portfolio to pay Janet’s mortgage and meet her expenses for the year she was off work. This ultimately reduced Gary and Roslyn’s investment portfolio by almost $70,000 (or 10%). 

While Janet fortunately made a full recovery, the cost to Gary and Roslyn of supporting their daughter in her time of need meant a dramatic change in their long-term retirement prospects; ultimately their income was reduced by $7,000 per year for the rest of their lives (a 15% reduction), plus their travel plans were significantly affected.

What can you do?

Believing that unfortunate events only happen to other people isn’t a responsible solution and is a terrible way to jeopardise your retirement. As part of looking after your own financial future, make sure that others who could affect your plans, such as family members, havealso taken the right steps for their own lives.

Talk openly to your adult children about their insurance cover and if they are putting themselves or you at risk, recommend they talk to a licensed adviser or let us know and we can talk them with you.

 

To find out more about insurance and the protection of your family, get in contact with our Wealth Protection Specialist Anthony Kane by calling 07 3245 5466 or email anthony.kane@morgans.com.au who can tailor a protection program for both you and your family.

 

 

 

Managing the cost of insurance

So, you are seriously starting to think about your retirement. The kids are finally more independent, the mortgage is less than it was, and the super is more than it was (at last).

You look at your monthly bank statements and one particular debit is always there. The insurance premium. You have been paying it diligently for years now, maybe decades. But for what? You’ve not claimed and ‘gained’ anything so far. 

At this stage and age, it might be very tempting to cancel your policies and save a few dollars. Before you do, just consider what you could be losing in a future that’s not yet written. It could be hundreds of thousands of dollars. More to the point it could be your home, your lifestyle, or your health - the very thing you are hoping to protect.

Statistically you are more likely to claim the older you get. Look at these facts:

Type of cover	Average age people cancel policy	Average age people make a claim
Income Protection	45	46
Total & Permanent Disability (TPD)	49	48
Trauma Insurance	44	49

 

People often don’t realise an insurance policy is not an ‘all or nothing’ concept and there are options available. For example, as you get older and your debts and commitments reduce so might the level of cover you require. When cover is reduced, so is the premium. Take care though, once a policy is in place it’s easy to reduce the cover but much harder to increase the amount, particularly as you get older. It often only takes a phone call to lower the amount but countless medical tests to increase it or apply again. 

But before you rush off and reduce your cover, it’s important to tailor the amount of cover to your potentially changing circumstances, and this is where your financial planner can help. 

There are many other options available including requesting a freeze on the premiums; paying annually instead of monthly; moving your cover into your super fund (this is not available to all insurance however); or given that your adult children will usually be the ones who will eventually benefit, ask them to share the cost of the premiums!

The basic idea of insurance is not to put you in a better position than you were – it’s there to protect what you have. Regardless of what age you are,think twice about cancelling insurance completely. There are always other options available. Ask us for guidance before you make any decisions.

To find out more about insurance and the protection of your family, get in contact with our Wealth Protection Specialist Anthony Kane by calling 07 3245 5466 or email anthony.kane@morgans.com.au who can tailor a protection program for both you and your family.

Did you know the 1 in 6 people have a stroke in their lifetime

Hey all,

  
Recently channel 7’s Chris Bath was on the Sunday night program doing a piece on Stroke. It provided information from Australian experts and some statistics throughout the show, but also on how stroke affected her Dad and their family (especially the importance of rehabilitation). 
  
If you have not had any experience with stroke, these articles can provide some background info and why I think its important that you make sure that you have appropriate insurance cover so that you and your family can be financially secure should it happen to you. 
  
Please refer to the links below: 
  
Video of Sunday night program. 
http://au.news.yahoo.com/sunday-night/features/article/-/19621686/my-dad-don/ 
  
  
A letter penned by Chris Bath to viewers on Stroke. 
http://au.news.yahoo.com/sunday-night/features/article/-/19660268/a-letter-from-chris-bath/ 
  
  
Article in the Australian about the Chris Bath and her father 
http://www.theaustralian.com.au/news/sunday-night-host-chris-bath-reveals-pain-of-her-fathers-stroke/story-e6frg6n6-1226752235854 
  
  
Reducing your risk of stroke 

There are 6 steps people can take to reduce the risk and the danger of stroke. These are: 

1. Know your personal risk factors: high blood pressure, diabetes and high blood cholesterol – Know Your Numbers.
2. Be physically active and exercise regularly.
3. Avoid obesity by keeping to a healthy diet.
4. Limit alcohol consumption.
5. Avoid cigarette smoke. If you smoke, seek help to stop now. 
6. Learn to recognise the warning signs of a stroke and act FAST. 
  
I hope you find this information useful. 

As usual, if you have any questions please get in touch.

Anthony

SMSF - Don't forget to protect your backside (and your family's)

With almost 500,000 Self Managed Super Funds (SMSF) being set up in Australia, there is an increased concern within government and industry that some clients may not know the extent to which they need to be compliant.

One area in particular that is of concern is that of adequate protection within your SMSF. When moving super out of the retail funds such as industry funds, the automatic insurance that was linked to the account is lost. To some, this may not worry them, but if borrowing within the super fund, like so many have done thus far, the area of ‘Liquidity‘ becomes a very important factor.

If you have borrowed within your super fund, and you are the main ‘guarantor’ on the loan, then on your death or permanent disability, the bank will ‘Call the Loan’, simply because they want to make sure they are paid when you are no longer here.

What happens when the bank calls the loan on your death?

In order for your family or estate to pay the loan back to the bank, they will need money. This seems simple enough.

But where is that money going to come from? They can do one of two things:

1) Sell the asset in your super fund at that time (This would be at a fire sale rate as the funds are needed immediately, potentially selling for under market value) or;

2) SMSF Insurance – Take the proceeds from a life insurance benefit to pay out the lender, retaining the asset (property, etc) within the fund, to be paid to your estate/beneficiaries, etc)

What if there is more than one person or a couple within your SMSF:

If there are other family members within your SMSF, and the fund needs to pay your portion of the estate out, the remaining members share will drop dramatically.  Insurance for the amount needed to ‘buy out’ your share of the SMSF for your estate is vital in keeping within the laws and must do for the welfare of other members of the fund.

The law says you ‘Must consider life insurance within the fund’. While its not manditory,  taking into account the points above you may find that by not taking into account liquidity issues actually impacts on your compliance of the fund.  You could find yourself in big trouble with a very expensive story to tell to the regulator or worse, leaving those that you love in a very poor position on your death.

How do you know if you are complying with this part of the regulations?

Firstly, get in touch with the accountants who helped you set up your fund, as they are ultimately responsible for the advice you receive on your SMSF.     I can give you some points to consider and some figures to determine whether you can afford  not to have protection within the fund.

If you have an questions, get in touch.

Anthony

Qld WorkCover Changes – 
why should you be concerned?

This week the Queensland Government will pass legislation through the Parliament that will change the outcome of many future workers compensation claims.  So why should you be concerned about this? 

The proposal:

The proposed changes to QLD's Workers Compensation have the effect of limiting individuals rights to seek a common law remedy. If a threshold is introduced (as proposed), it will prevent employees pursuing common law claims if a WorkCover doctor determines that the permanent injury suffered by the employee is between 0-5%. WorkCover would then treat these injuries under a system like a "schedule of rates" offering proscribed payments for the severity and type of injury. The proposed change is effectively trying to remove smaller claims and keep workers compensation payouts under control. Employers also want their premiums to fall.

The issues:

1. According to the annual WorkCover Report 2012-13. WorkCover QLD made a profit of $517m, this alone indicates that workers compensation payouts are under control and that workcover qld has the ability to decrease WC premiums in industries that have seen increases above CPI over the past 2 to 3 years.

2. Again the annual report tells us that 43% of the Workcover claims came from 3 industries: 1. Manufacturing (18%), 2. Healthcare and Social Assistance (14%) and 3. Construction (11%)

3. Common law payouts have decreased from $513m in 2011-12 to $461m in 2012-13.  The average cost of a statutory claim was $6960 whilst the average cost of a common law claim was $138,059

4. Preventing access to common law compensation will prevent the worker from suing the employer for the loss of lifetime income that can occur as a result of even a small change in their physical ability.  For example if a 4% decrease in brain function may render it impossible for a worker to operate a vehicle or complex machinery.  For many this would spell the end of their employability.

5. With 50% of all Worker Compensation claims coming from the 5% threshold or below, this legislation will simply remove that cost and result in those claimants not being able to access adequate compensation.

Today's announcement has surprised and disappointed many in the legal industry at how fast the Government has moved to make changes without proper industry consultation. Historically, key stakeholders have been given plenty of notice and consultation. The changes is will be tabled in parliament before the end of this week, most likely Thursday.

Due to the LNP Governments overwhelming majority, this legislation will pass without debate and discussion.  So how then do you protect yourself and your most valuable asset, your ability to earn income?

Your solution:

Well your options haven't changed, they have just become clearer.  The process of protecting your income can be done simply by contacting your preferred Wealth Protection Specialist.  He or she will be able to assist you in finding a solution that can be tailored to your individual needs and those of your family.

If you’d like me to assist you, please get in touch by phone, email or twitter.

Anthony

Drinking increases risk of bowel and breast cancer

An advertising campaign was launched in March last year (2012) warning people that drinking alcohol greatly increases their risk of being diagnosed with breast or bowel cancer.  I don't want to be a Nanna, but with the end of year party time soon to arrive, I though it would be good just to remind us of the some of the results of alcohol consumption that are not often understood.

'The Cancer Council of Australia's Ian Olver says the campaign will warn people that alcohol is a grade one carcinogen.

Professor Olver says anyone who consumes more than two standard drinks of alcohol a day is at risk.

"Alcohol is being classified in the same league as tobacco and asbestos for the certainty that over time it can lead to cancer," he said. "And. we need to tell people about that because it's clearly a modifiable risk factor for cancer."

Professor Olver says bowel and breast cancers are very common.

"We're actually recommending to people, the same as the National Health and Medical Research Council, that a couple of standard drinks a day puts you into the very low risk category but certainly the risk increases with the amount of alcohol consumed," he said. He says a couple sharing a bottle of wine over dinner would be four standard drinks each, which is too much.

" It's more than we'd recommend if you want to lower your risk of cancer," he said.

"Previously it was thought that some of the rarer cancers like liver cancer and head and neck cancer were caused by alcohol, but now it's been linked to two very common cancers, bowel cancer and breast cancer.

"And, that's why we think it's worth the population knowing, particularly if they've got other risk factors for those cancers.'

I guess that it goes back to the old saying 'everything in moderation'.....and yes, I will be drinking the odd glass of wine and beer this year, but not to excess.

Stay safe everyone.

Anthony

An Honest Eulogy: did you say what you thought?

During a recent Estate Planning meeting I was asked by a client if I had ever written a eulogy before. This is not an uncommon question particularly as we were discussing her 'letter of wishes' and the fact that she was reflecting on her life and that of her mother who had passed away recently.

I talked to her about the difficulty that I had with writing my fathers eulogy.  I only had two minor problems I said.  Firstly, I didn't know how to start and then secondly, what do you say? 

Peter Kane, my dad

Well I consulted 'Google' and found a number of sites which were helpful in trying to gather some structure, but I didn't really find anything that grabbed me, so I started anyway...well sort of.  I initially started, then put it down, then crossed it out, then put it away, then started again.....well, you get the picture.

I decided that I would just talk to Dad.  It was the single most difficult piece of writing that I have ever done. By the end of the first paragraph I was in tears. I would tell my fathers story from my perspective and recognise that he was a different man to different people.  Warts and all with love and respect.

Anyway, here it is.  It made me cry like a baby when I read it at the funeral, and it makes me tear up when I read it now.

Eulogy for Dad, 13/07/2011 

Well Dad, you were right. 

At last you were right.  For the last 35 years you have been telling those who were close to you that, ‘this will be the last christmas/birthday I see’.  Well, at last you were right. Here’s to you. 

You are unique and I’ll tell you why.  Everyone who got to meet you got their own version of Peter Kane.  This is about my version, my closest and dearest friend, my Dad. 

Your mother died when you were in your early teens and your father in your early twenties. These significant events inevitably shaped your view of the world and your place in it.  A constant sense of impending doom pervaded every part of your life from those moments onwards.  During the second half of your life you became a very anxious man often gripped so tightly by fear that you were incapable of functioning.  When you could function, it was aided by the facade of false confidence, bravado and drugs just so you could accomplish simple tasks.  You were either on or off.  But I know that it wasn’t always this way. 

From the outside looking in, a stranger could be forgiven for thinking that you wasted the greatest opportunity of your life. Time.  

Your life was lived as you chose it.  It had its sky scraping highs as well as almost bottomless lows. It was life full of contradictions and irony right to the end. 

You made a career out of observing other peoples behaviour and trying to understand it.  Their behaviour was all about their freedom of choice and the results that were created.  Now whilst you said that you didn’t believe in ‘fate’ or ‘destiny’, secretly this is how you viewed your own world.
Your daily uniform for as long as I can remember has been sandshoes, sports socks, white shorts, a striped polo top and your gold medallion. You looked for all the world like you were going to or coming back from playing tennis.  But the last time you played tennis must have been 35 years ago. 

You are a quiet man, but you love an argument. Often just to amuse yourself or test the intellect of others. 

You are a thoughtful man, but you are often careless with your relationship with those who love you the most, your family. 

You hate hospital and doctors, yet your local GP practice is about to notice a significant drop in revenue now that you no longer require their services. 

You are a generous man, and loving man, a polite man and I don’t think that you ever missed an appointment.  You are one of life’s characters and also one of its last gentlemen.  Appearances are important to you and trying to keep up an intelligent, confident and civil persona when in public is always a priority. ‘If you can’t be a good cricketer, at least try and look like one’ I hear your voice ringing in my head. 

When you are on, you are sociable, a great conversationalist, knowledgeable and funny. 

When you are off it is like you are on life support until you were ready to get on life’s stage again. 

You have a diverse range of interests but you are passionate about music, books, sport and politics. 

As a trained musician, your music interests range from classical to country, jazz and blues to rock ‘n roll.  Strauss, Chopin, Cash, Ronstadt, Joplin, Sinatra and Jelly Roll Morton amongst others have been your constant companions.  You see no point in the fluff of pop or the faux poetry of rap and hip hop. 

As the son of a journalist you learned to read competently before you were enrolled at school.  Your love of a well constructed story shaped your professional life and that knowledge you have passed on to me.  Start at the end, engage your reader with short sharp sentences and make your point....and then make it again. 

Lately you have been expanding your knowledge of the human brain, your understanding of how and why it works.  You have spent a lifetime of hours researching the subject in town and at University of QLD and without doubt it’s helped you exercise the organ that you are most proud of, your own brain. 

How ironic is it then that you are currently sitting here without it.  I have no doubt that you are feeling very special that you currently have some very highly qualified doctors poking and prodding your brain to find out the genesis of your aneurysm.  Don’t worry, I’ll get it returned to you with a full report, I’ll read it to you and you’ll love it. 

Now correct me if I’m wrong, but Cricket may have been your first and lifetime love.  I’m quite sure you never tired of it even though the introduction of the pyjama game in the 1970’s and 20/20 lately has tested your relationship. Whenever I saw you, you wanted to know who was playing around the world and what the score was. 

My teenage years are indelibly intertwined with your cricket passion.  You spent so much time showing me how to play the game the correct way.  Technique was king and if you didn’t have that then you were just guessing.  I talked to Andrew last week to tell him that you died.  He is shattered.  He was the closest thing that I had to a brother growing up.  He loved you like a father.  He spent more time with you than he did with his own Dad and is forever grateful for you teaching him the real meaning of cricket. You’ll be proud to know that it’s continued to be his passion; he still plays and thinks of you whilst doing so.Golf is your other sporting passion and one that you were still playing until recently.  You pretty much had your second home at the Royal Bulimba course......but I don’t recall you ever paying for a round.  In fact when was the last time you paid for a round of golf?  1975?  Anyway, I’ve brought your shoes and a 5 iron along just in case you need them. 

Your interest in Australian politics died sometime during the Hawke/Keating years. It may have had something to do with the ‘recession that we had to have’. You had no interest in the petty factional led debates performed by a bunch of amateur intellects and failed solicitors.  Your real interest lies in the circus that is the US electoral system and their power politics.  Your admiration for the professional bullshit artists of US politics is not surprising.  You often said that if you want to see what it looks like when the grown up’s play, have a look to the US.  Your experience working with Americans taught you that.  When I talked to you last, you were looking forward to the battle for the Republican Party nominations which is just about to start. I was looking forward to our heated debates. 

Since coming up to Brisbane 9 years ago your view of the world improved.  I watched as you became confident enough to get out and go shopping, travel into town and play golf on a regular basis. You were finally leading a life that to some would be dull and boring, but to you every time you went out, it became an adventure and one that was worth telling me about.  And after a couple of false starts, you even managed to get yourself to Ballina, Lismore and Toowoomba to play golf. 

You became a regular at both the City Library and the University of Queensland.  You loved nothing more than to walk down to the city cat early on the weekends in summer and ride up to the UQ to watch the 1^st and 2^nd grade cricket and surround yourself with people who were young and enthusiastic about your passion. 

You moved it up a gear when Rosie came along 4 years ago.  You became her Poppy and not only did she love seeing you she loved getting books thoughtfully chosen by you.  We read every night.  She always reminds me of the books you have given her.  It’s because of you that she loves to read books and this will influence her life forever. I will make sure that Esther shares this love as well. 

I first met you in late 1969 when you were 32 and I know you had some real difficulties dealing with me for a few years early on.  Well its 41 years later and I’m so glad that you chose to be my father.   During this time I’ve learned a lot of lessons from you, some invaluable and some best to ignore.  

The most valuable one is the one that I am passing on to my girls and it is this: 

Always to tell those around you that you love them, never be afraid to show it and, never let the sun set on an argument.  

Even though my half of your adventure has had its ups and downs, I wouldn’t have missed it for the world.  We always made a point of never saying good bye, so as always I’ll give you a kiss and hug, I’ll tell you that I love you and I’ll see you again soon. 

My version of Peter Kane was my Dad and he was the best.

Anyway, there it is.  I hope by putting this up here it can help guide others decide how to get started and what to say.  Once I decided that the eulogy was going to be my way of having a final conversation between me and my father rather than a dry 'memorial' of his life, the writing flowed.  Interrupted only by my wading through a box of Kleenex every five minutes or so.

Till next time, look after yourself and your family.
Anthony