Investing 101

According to an Australian Bureau of Statistics report published in September 2018, cancer is the most common cause of death in Australia accounting for more than 29,000 fatalities in 2017. Incredibly, thousands of Australians are underinsured or have no insurance in place to cover the expenses caused by life-threatening illnesses. The grief experienced by family for loved ones suffering is often compounded by the costs associated with treatments forcing some to sell the family home to pay for extra time. If you were one of these statistics, what value would you place on having access to the best available treatment to help you in beating a potentially fatal disease? Think about how important it would be to take as much time off work as you needed to recover and not worrying about having enough money to pay the bills. What is trauma insurance?South African heart surgeon Dr Marius Barnard pioneered the idea of trauma insurance when he regularly witnessed his patients’ families struggling with medical costs. The first policies were offered here in the 1980s. Trauma insurance, also known as ‘living insurance’ provides a lump sum payment in the event that you are diagnosed with or suffer one of a range of traumatic conditions such as cancer, heart attack and stroke. Medical advances have meant that our chances of surviving traumatic events are much better than in the past. However, the cost of treatment can sometimes be beyond your normal means. Without insurance cover, you may need to dip into your children’s education fund or your retirement savings; or you might even have to increase your mortgage to pay for expensive treatment. The difference to income protectionImportantly, a trauma payment is not dependent on you being unfit to work (unlike income protection, where you need a doctor to certify your ongoing health). The diagnosis of a traumatic condition might mean that you physically could go to work, but would prefer to spend time with your family and reduce any work-related stress while you recover and consider how your future will be affected. Trauma insurance can provide the financial support to allow this flexibility with your work arrangements. To make sure you don’t increase the statistics, carefully compare the many variations of trauma policies available. There are significant variations in the features between policies such as the number and types of events covered, premium options and ancillary benefits payable. If you require assistance, please contact us today to obtain the right policy for you.   This is general information only  

With Australia’s age pension being subject to an assets and income test, a simple way for part-pensioners to increase their pension payments is to give away some assets. Not surprisingly the government is on to such an obvious strategy. It’s called gifting, and while it is perfectly legal for you to give away whatever you want whenever you want, if you exceed the relevant limits, Centrelink will continue to assess, what it calls “deprived assets”, for five years. The limits Gifting is defined as giving away assets or transferring them for less than their market value. Limits are the same for both singles and couples. If you give away less than $10,000 within a single financial year and no more than $30,000 over five consecutive financial years, Centrelink will disregard these gifts. Any gifts in excess of the allowable amount will be assessed as an asset (and, where applicable, subject to the income test) for a period of five years from when the gift was made. Planning ahead These rules don’t just apply to existing pensioners. They also concern anyone who is applying for the age pension, as recent retiree Frank discovered. Frank has reached age pension age and based on his current assets and income he should be eligible for a part pension. However: Four years ago he gave his daughter one of his cars, valued at $25,000. At the same time he gave his son $25,000 in cash, to match the value of the car. Two years ago Frank sold a beach house on the open market for $210,000. This was $40,000 less than the initial valuation from the estate agent. In the past year he spent $35,000 on home renovations and $15,000 on an overseas trip. What does this mean for his pension assessment? The money spent on renovations and holidays count as normal living expenses, not a gift. Likewise, with $210,000 being the best offer Frank received for his holiday home after it had been on the market for a couple of months, the property would not be considered to have been disposed of for less than its market value. Whilst he understands that the money he gave to his son is clearly a gift, Frank’s biggest surprise is the treatment of the car. Four years after he gave it to his daughter it’s about to be treated by Centrelink as an asset Frank still owns. That means Frank gave away $50,000 in one year. The annual ‘Gifting Free Area’ is $10,000, so the difference, $40,000, will be counted as an asset for the next year. This will reduce his pension by more than $100 per fortnight. If Frank had thought about his pension five years before he was eligible to apply for it, he could have achieved a better outcome. Seek advice To gift or not to gift? It’s an intricate question. The right answer depends very much on personal circumstances, so talk to your financial planner. He or she can help you work through all the issues, including the complex calculations of the impact of multiple gifts over several years.   To gift or not to gift 31/10/2018 This is general information only