When choosing an insurance policy, it is vital to achieve a balance between the cost of the premium and the product's features.  Acting in the client's best interests to achieve this balance is at the core of Cornerstone Insurance's philosophy.

There are a wide range of considerations that apply when purchasing almost any personal insurance product.  A selection of these are discussed below: 

Should I select Level or Stepped Premiums

Whether you should select level or stepped premiums (or a combination of each) depends on your personal considerations, including your age and how long you plan to hold your life insurance.

'Stepped' premiums describe the situation where your insurance premium increases with your age.  This allows you to obtain the correct level or cover, while minimising the premiums you pay now.  Over time you may review your level of cover to determine if it is appropriate, potentially reducing it (and consequently the premiums you pay) as you build up more assets.  Some types of insurance, such as Child Trauma policies, only offer Stepped premiums.  

'Level' premiums describe a premium structure where premiums remain constant from year to year (with some exceptions) This allows you to fix the cost of your insurance while you are young and healthy.  However, level premiums are initially more expensive than stepped premiums.  The terms of the insurance should be read closely, because the product disclosure statement will often outline situations where the insurer may increase the premium.

CORNERSTONE INSURANCE PROVIDES ADVICE ON WHICH TYPE OF PREMIUM(S) IS IDEALLY SUITED TO YOUR NEEDS.

Are insurance benefits indexed by inflation?

Inflation may erode the initial sum insured over time.  Although most companies automatically allow for the escalation of your benefit in line with inflation, ensure you check that your cover allows for this to avoid an inadequate payout.

Should I hold insurance in my super fund?

Whether you should hold insurance in your super fund depends on a range of factors including the type of insurance your are seeking, whether you have dependents, and your marginal tax rate.

Holding insurance inside your superannuation fund can limit the effect of premiums on your cash flow, because premiums are paid from you superannuation account balance and investment earnings.

Superannuation can also be a tax effective vehicle to house particular types of insurance.  One reason for this is that you may be able to salary sacrifice the cost of the premiums into your superannuation fund, from which the premiums are paid.

Holding insurance in super can also have estate panning and associated tax planning benefits (i.e. the use of account based pensions to children can be a useful tax strategy).

We are happy to advise you as to whether you should hold a particular form of insurance in superannuation.    

CORNERSTONE INSURANCE PROVIDES ADVICE ON WHETHER YOU SHOULD HOLD A PARTICULAR FORM OF INSURANCE IN SUPERANNUATION.

Is there any benefit to holding all of my insurance policies with one insurer, or linking policies?

If you 'package' all forms of cover with one insurance house where possible, you may be able to take advantage of: 

  • reductions on additional policy fees;
  • streamlined application and claims process;
  • the option of multiple policy discounts.

Depending on the reason for seeking insurance cover, it may be beneficial to have a 'linked' policy (i.e linking your life insurance to your TPD insurance) to reduce the cost of premiums.

Life insurance does not attract stamp duty.  Therefore, linking other types of insurance that do attract stamp duty to a life insurance policy can achieve a tax-efficient outcome.

Of course, whether you should link particular policies depends on your circumstances and the terms of policies.  Cornerstone Insurance will advise you on the optimal structure for your policies.  

Insurance and estate planning

Ultimately,you are seeking insurance to protect the financial position of you and your family.  So, it is important to ensure that in the event of your death, any insurance benefits you are entitled to are used effectively to provide for your family.  Therefore, it is important to consider estate planning when you are considering your insurance.

CORNERSTONE INSURANCE integrates insurance and estate planning advice to ensure you obtain holistic advice that protects the financial stability of your family.  We advice clients on a range of insurance and estate planning issues such as:

  • policy ownership

  • testamentary trusts

  • superannuation proceeds trust

  • superannuation contribution tax refunds (anti-detriment payment)

  • SMSF death, terminal illness and disability payout tax deductions.

 

Contact us

For impartial, individualised and expert advice on personal insurance, contact Cornerstone Insurance.