Although nobody likes to think about serious illness or injury, much less plan for it, the truth is that Australians are being diagnosed with cancer at increasing rates each year, in addition to increased incidents of heart disease and stroke. Medical science has become so sophisticated in recent years that most people survive serious health problems. In many cases, they not only survive but go on to live for years. Although this is great news for all of us, it also draws our attention to the cost of surviving a serious medical event, and the effect it can have on our families, lifestyles, and our ability to earn an income. Along with the price of experiencing life-saving medical intervention, unless you are independently wealthy or have a comprehensive insurance portfolio in place, the cost of a major medical event can be financially devastating, particularly if you are no longer able to work and earn an income. For this reason, it's important to consider the benefits of trauma insurance.

Trauma Insurance is also known as critical illness or accident insurance.

Trauma insurance can pay a lump sum in the event that you are diagnosed with a serious illness or suffer a serious injury, regardless of your ability to return to work. Each insurance provider has their own language and list of medical conditions covered. Generally, most trauma insurance policies cover cancer, heart disease, and stroke, and can be purchased as a stand-alone policy or along with a life insurance policy.

Generally, most insurance providers pay on trauma insurance claims after you have survived for 14 days past the particular diagnosis. Having a critical illness insurance policy in place can mean the difference between surviving your diagnosis and maintaining your quality of life, and experiencing serious financial hardship as a result.

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Who needs critical illness insurance?
If you are unsure about whether or not a critical illness insurance policy can benefit you, we can assist you in this area, as it's our view that everyone who can afford this type of insurance should have some of it. There are a number of reasons other than medical expenses for considering critical illness/trauma insurance; other areas that are at risk whilst you may be unable to work, or whilst you may be unable to work in your career are relevant if you:
1. Have a mortgage
2. Have a family who depends on you financially
3. Have credit card debt
4. Have other debts that must be repaid
5. Lack of sufficient cash reserves to cover unexpected medical and hospital bills
6. Own your own business
7. Have business partners
8. Hold a key position at work, such as a company director or manager
9. Are self-employed

The cost of treatment for a critical illness can be astronomical, and while private health cover usually helps, there is always a gap.
If you'd like an obligation free assessment of your personal insurance needs, including the suitability of trauma insurance, please don't hesitate to contact us.

This week we're continuing our education theme on insurance, and we'll branch into one of the more common types of insurance, that of income protection. The fundamental starting point with this topic is the notion that our greatest asset is always our own ability to earn an income. It's that income that generally funds everything else in our lives – our other assets, and our paid experiences with our families. So when that income dries up for a period of time, there are often many other knock-on effects.


Income protection is a form of insurance that provides a replacement income stream for a period of time that you're unable to work or generate your own income. The premiums are tax deductible but the insurance benefit amount is taxable at claim time.
This type of insurance can be held both inside and outside superannuation, but we'd always suggest holding a policy outside super is your best option. This is due to the tax deductibility of claims, as well as the ease at claim time. And speaking of claim time, you are eligible to receive a claim payment as long as you've been off work for a certain period of time (this is the waiting period) and you're unable to earn an income yourself during this time. This claim payment will continue for as long as you are unable to work, or for as long as your policy benefit period indicates – whichever is shorter.

Income protection gives you 24/7 coverage, and for this reason, it's important to those people working for wages as well as those people who are self-employed. If you're self-employed, you won't be covered by WorkCover, so an income protection policy is a vital and prudent safety net.
The types of factors that will make your premiums either more or less expensive are your age, sex, occupation, smoker status, and general health. And for this reason, we'd suggest locking in your income protection at a time when your health is most likely to be sound – generally while people are younger.

An income protection policy is a great way to put a floor in any financial plan for those who are earning an income. If you've got an old policy, it may be worth checking to see if a better option is now available on the market, or, it may even be best to stay with your existing cover if you've developed some health issues over the years. Either way, if you'd like a second opinion on this or any of your other insurances, please don't hesitate to contact us.

How long could your family survive financially if you were suddenly unable to work? This week we'll continue our discussion on insurances, but focus on Total and Permanent Disability or TPD insurance. It's a topic that not everyone is interested in or enjoys discussing, but it's our belief that any sound financial plan takes into consideration a "safety net" for when it all goes wrong, and for many people, that safety net is insurance.



There are a few fundamental ideas that go hand in hand with insurances: firstly, we need to recognise that our biggest single asset is our own ability to earn an income over the timeframe of our working life. This is called our "human capital." If you stop working at age 40, either through death or disability, and you would normally be earning $80,000 per year through to age 60, your family has just missed out on 20 years of that $80,000, or $1.6M to be exact, assuming no further pay increases! This lost working capacity is the real asset that has been lost in this type of event.

The second fundamental concept to be clear on is the idea that income only comes to form one of two areas: either your "capital at work", meaning your investments working to generate an income for you, or a "person at work." If a person is not able to work to generate their own income, the only reliable fall-back position is the amount of investments you hold.

For this reason, we'd suggest an amount of TPD insurance is a prudent move for most people of working age. TPD insurance is a lump sum amount that pays out if a person is unable to work and will never be able to work again in the occupation they are trained for and experienced in. For example, if you're a truck driver and you suffer a back injury that stops you from being able to sit in your truck and drive, you would be eligible for a TPD claim.

TPD can be held either inside superannuation or outside super, and premiums vary depending on your age, smoker status, sex, and occupation. In reality, most people direct these claim amounts towards a combination of debt reduction, medical expenses and lost earnings.

We never want to imagine things going wrong, but if they do it is best to know that you are covered. Money should never add stress to your life especially when your health is in question. At Schuh Group we are passionate about providing our clients with the best opportunities in life. We take the stress out of money to ensure that you are always covered. If you'd like an obligation-free second opinion of your disability insurance position or any other concerns do not hesitate to contact us.

How long could you last financially if you lost your job, or worse, couldn't work at all?

Research from Zurich says nearly 60% of us would be looking behind the couch within three months, while a recent survey by an insurance comparison website found it was closer to half of Australians. Of course, this data comes from fairly minimal surveys sizes, but these often consistent findings do point to the high levels of risk many Australians carry.

Our elevated house prices are underpinned by high debt levels – our housing debt to disposable income is still near an all-time high, around 140%. Go back nearly 20 years ago, to 1999 and it was 76%. These kinds of debt increases are further partnered with other ongoing commitments that quickly drain the weekly income.

Forget your house or car, generating the income to pay for them along with the food on your table (and all the other bills) is your most important asset. The two most obvious options to protect yourself are a consistent savings plan and insurance.

However, saving won't be anything more than a short-term bridge because it would often be impossible to save what insurance could cover in the event of illness or injury. When it comes to considering insurance the worst thing to think is "it can't happen to me". Walk into any hospital and you'll find people in shock that a permanent injury or serious illness has struck them down.

In Australia, while cancer and cardiovascular disease deaths are down, more people are living with their after-effects, which inevitably impact their employment and income. For a 40-year-old male, there's a 28% chance they'll suffer a disability or medical trauma by 65, while for a 40-year-old female there's a 23% chance.

No one knows if (or when) they may suffer a serious health issue, but everyone can plan in the event of it. It might remove that concern about what happens after three months without an income. If you would like an obligation free review of your current insurance program, or if you'd like to talk more about how life or disability insurance would apply to you, please contact the team at Schuh Group.

Deliverance From Bad Insurance

Gains by the major banks, miners and energy companies have pushed the share market's benchmark index past 6,000 points for second time this month. The benchmark S&P/ASX200 stock index gained 26.8 points, or 0.45 per cent, to 6,011.1 points, as the banking and mining heavyweights took advantage of positive offshore data and a swing in sentiment on the local market. Despite a dip in the price of iron ore, miners also gained ground, with BHP Billiton adding one per cent, Rio Tinto edging 0.2 per cent higher and Fortescue Metals rose 1.3 per cent.The Australian dollar is back below 76 US cents as the US dollar rose due to improved consumer confidence data and comments from US Federal Reserve Chair nominee Jerome Powell that supported expectations of a rate rise in December.

If you've ever seen the classic film Deliverance you'll know it's the ultimate insurance advertisement. The character of Lewis, played by Burt Reynolds, begins the film proudly declaring, "I never been insured in my life. I don't believe in insurance. There's no risk." Movie fate ensures the canoeing trip Lewis and his friends take is beset by disaster. Lewis ends the trip with a compound leg fracture. And for those who haven't seen the film, he's the lucky one! There's probably no worse outcome than being uninsured and struck by some kind of misfortune – unless you're insured and struck by some kind of misfortune and your insurer doesn't come through. What's the likelihood of that happening? According to ASIC's review into life insurance (focusing on 15 companies or 90% of the life insurance industry) which came out in October 2016, 90% of all claims are paid in the first instance. This is an across the board figure combining life, total & permanent disability (TPD), Trauma and Income protection.

But what are the decline rates in each insurance area? 4% of life insurance claims are rejected, 7% of income protection claims are rejected, 14% of trauma insurance claims are rejected and 16% of TPD claims are rejected. While 7% of policies purchased through an adviser were rejected, that figure rose to 12% if the policy was purchased without advice. Which may signal two things: insurance advice comes in handy because an adviser can use their experience to navigate policy selection; and if a claim needs to be made an adviser will be working on behalf of the policyholder for a result.
The rejected trauma claims at 14% and TPD at 16% appear slightly uncomfortable to look at. Depending on the insurer (not specifically named in this section of ASIC's report) these ranged from a low of 6% of declines at one insurer for trauma cover up to 31% for the highest. For TPD the low was 7% at one insurer, while the high was 37% rejected by another insurer. While we don't specifically know the insurers most likely to decline claims, Adviser Research followed up ASIC's report with research of their own. Adviser Research surveyed advisers on their experiences with the 15 insurers featured in ASIC's report.

The best three insurers for claims handling according to advisers? Asteron Life, AIA and TAL. The worst three insurers for claims handling according to advisers? Comminsure, Clearview and Macquarie.
In those categories of trauma and TPD? Asteron were voted the best claims handler in both trauma and TPD, while Real Insurance, Comminsure and Allianz were rated poorly by advisers in trauma and TPD. So Comminsure is living up to its recent media reputation, basically being ranked down with direct insurers such as Real Insurance. Comments from advisers were indicative of the level of distrust, with suggestions that Comminsure had been either implicitly or explicitly removed from their approved list of insurers. As one adviser said in their survey comments, "If the biggest company in Australia has a policy of denying Trauma claims, there is a major risk to consumers".

Something to consider if you're planning a backwoods canoeing trip.

Recent insurance scandals with insurers showing a belligerent attitude to paying claims may have left some of us forgetting that insurers actually do pay claims. You wouldn't think so, given some of the media coverage, but Australian life insurers pay out a significant amount of claims each year. Here's the proof.

Australian life insurance claims paid by major insurers surpassed $9 billion in total for the first time in 2016. With that in mind, we've decided to take a look at the claims statistics from two insurers who each paid out over $1 billion in claims during 2016. The insurers are AIA and AMP Life. To highlight how these insurers are seen in the market place, in a recent Adviser Ratings research survey AIA were rated in the top three by advisers overall for claims handling. In contrast, AMP was rated mid pack for claims handling in each insurance category. However, the advisers who chose to offer additional commentary on AMP Life weren't overly positive in their responses. Comments offered on AMP Life were 72% negative, in contrast, the comments on AIA were 76% positive.


Bear in mind the following claim stats come from company marketing documents and their statistics groupings are different, yet they do highlight an important point – the old "it won't happen to me" strategy isn't a wise one. The average person does fall victim to injury, disability, illness and premature death.

According to AIA, they paid out $3.16 million per day. Overall their biggest monetary claim area in 2016 was death at 45.5% (or as the industry calls it life cover), followed by total and permanent disability (TPD) at 26.4% of claims, income protection at 23.2% and trauma insurance at 4.8% of claims. The breakdown of life cover claims paid at AIA was 62.3% male and 37.7% female, 56.5% of claims paid were between the ages of 45-65, with 38% of life cover claims paid to be the result of cancer.

TPD claims paid at AIA were again majority male, 56.2% compared to 43.8% with 30.3% of them relating to musculoskeletal issues and 30.1% relating to cancer, respiratory, infectious diseases, 17.7% were mental health related and 12.4% were paid for consequences of injuries. AMP Life paid out $2.9 million in claims per day, with cancer resulting in 45% of life cover claims paid with heart attack & stroke resulting in 19% of life cover claims. The average age of a life claim paid was 53-year-old.

TPD claims paid at AMP Life had an average age of 49, with the largest claim area being musculoskeletal at 25%, with mental health following with 19% of claims paid. The other factor worthy of note is the age or age bracket where vulnerability appears highest. At AMP the average age for all claims was 52 years old, while at AIA the 45-55 age bracket saw the highest percentage of claims in each of the four insurance cover areas.

While this makes for sobering reading, it is a reminder that insurers (for the most part) actually do come through. If you'd like an obligation and cost free second opinion on your current insurance program, please give us a call on 07 5482 2855.

Shares were buoyed by slightly better-than-expected economic growth numbers, but a slide in Wesfarmers kept the market in the red, while sentiment remained fragile ahead of a number of global risk events this week. The benchmark S&P/ASX 200 index slipped by the slimmest of margin, 0.005 per cent, to 5667.2, its third close in the red this week.
The Australian dollar hit a one-month high on Wednesday as economists breathed a sigh of relief after the release of weak but as expected first-quarter GDP growth figures. The local currency gained a third of a cent to US75.3¢ immediately after the Australian Bureau of Statistics revealed the economy grew by 0.3 per cent over the first three months of the year, in line with consensus expectations. The Aussie then continued to push higher through the session to fetch US75.4¢ in late trade. Globally, worries about the outcome of the UK elections, a potentially dovish stance by the European Central Bank at its policy meeting and former FBI director James Comey's Senate testimony kept investors on their toes.


What this means for you:
I am currently attending an insurance conference in the USA which has prompted me to write about a recent survey that has found that over eight in 10 Australians were swayed by the cost of life insurance premiums, with price competitiveness being more significant to consumers than product features, claims reputation and service levels, according to research from life insurer NobleOak.

This research also found that there has been a move towards an increasing preference for consumers to purchase insurance online. Whilst this may be convenient, the shortened application process and limited scope of some direct offerings in the market means consumers can be at greater risk of not being in the right cover which is concerning as these shortened application process can result in problems at the time of claiming when customers may need to answer more detailed health questions and supply a report from their doctor. Not only does this slow the process down at a time when a customer is emotionally distressed, but it could reveal a pre-existing condition with the claim being denied.

Direct insurance purchased through the television or other streams will almost certainly not be structured to allow you to maximise the tax concessions available, which means you could be paying more for this insurance than you should be. If you don't have personal insurance or would like to review your existing personal insurance to make sure that you and your family are adequately protected, please give us a call. We have recently had the experience of a client having to make a claim against their trauma cover due to a shock diagnosis of a life threatening disease. Obviously these types of situations are incredibly stressful regardless of your financial situation, but our client has told me that they would be in a far more terrible situation if they also had to worry about paying the bills as well. 

If you would like to review your current structures, contact us today here or call us: 5482 2855

The Australian share market finished flat on Wednesday, as investors remained focused on the release of jobs data in the United States later this week. In choppy trade - the S&P/ASX200 barely moved, down 2 points (less than 0.1 per cent) to 5759.7, while the broader All Ordinaries Index lost 2.5 index points to 5799.5. In the US the S&P 500 and the Dow Jones Industrial Average swung between losses and gains on Wednesday after a strong private hiring report raised the odds of an interest rate hike next week, lifting bank stocks while dragging rate-sensitive sectors.


What this means for you:
Have you ever wondered what you'd do if one of your children was seriously unwell? Would you have to stop work to take care of them? You may like to consider taking out a Child Trauma Policy, which provides a lump sum payout if your child is diagnosed with a critical illness. These policies are very low cost, but they do provide an injection of funds at a time when medical costs can skyrocket, and one parent usually has to take on a carer role. Policies are available for children aged between 2 and 18, and at 18 they can be transferred into an adult trauma policy.

We've had International Women's Day this week and it's a good time to remember that women make great investors. Statistically, women tend to be more patient with their investments and are less likely to make rash decisions. So what are you waiting for ladies, get out there and make a start!

Falls in resource, energy and telecom companies, including Rio Tinto, BHP Billiton and Vocus Communications have dragged the Australian share market lower. The benchmark S&P/ASX 200 index closed 0.13 per cent lower on Tuesday, despite trading in positive territory for most of the trading session, underpinned by the financial sector. The Dow was little changed in late morning trading on Tuesday, pressured by a sharp drop in oil prices that weighed on energy companies, while a rise in healthcare and biotech stocks helped lift the Nasdaq and the S&P 500. The Australian dollar has gained ground on the back of stronger commodity prices. At 1200 AEDT on Tuesday, the local unit was trading at 74.90 US cents, up from 74.74 cents on Monday.


What this means for you:
While the share market has given up a small amount of its gains from the Trump election, it shouldn't be enough to make investors jumpy. Remember your long term goals and try to minimise these common mistakes that people make with their finances:
1. Not knowing your net worth. Make sure you're aware of this figure as it serves as your starting point.
2. Impulse buying. If you fall into this trap, chances are you haven't done a budget either. Take the time to think about whether your purchase will give you real long term value, or whether it's just making you feel good today.
3. Being risk-averse - if you've got a long investment timeframe, you can easily afford to take some risk with your investments. Go in with the knowledge that they'll move up and down in value, but you need not sell
4. Not insuring your biggest asset - you. The average person will work for 40 years, and earn around $70,000 per year in today's market. 40 x $70,000 means that the very minimum "human capital" you have to offer your family is $2.8M, assuming there are no future pay increases. If you had a house worth $2.8M, would you insure it? I think so! Make sure you insure yourself as well.
If you would like to review your current structures, call us on 5482 2855.


If you're at all interested in wealth creation, you need to consider a wealth protection strategy at the same time. By this we mean your personal insurance plan, so you can protect yourself and the things in your life that matter to you. The most important type of cover for the younger generation is certainly income protection, simply because it protects your greatest asset – your ability to earn an income. 

If you are 30 years old and earning an income of $80,000 per annum, you will earn $2,800,000 between now and the age of 65 over the next 35 years! (Not including tax, inflation or future pay increases). So by insuring yourself for your working life, you are protecting an asset that is worth $2,800,000 to you! This sum of money will go a long way to determining what sort of lifestyle you live and how many of your goals you achieve. 

Listed below are the most important points included with an income protection policy:

Monthly benefit:
This is the amount of cover you are allowed to insure and is normally up to 75% of your taxable income, and is the figure that would be paid to you monthly in the event of a successful claim.

Waiting period:
This is the time you must be off work due to your accident or sickness before a claim can commence. Common waiting periods are 30,60 or 90 days.

Benefit period:
This is the amount of time that the claim can be paid if required. It can stretch from two years up to age 70 in some cases.

What is covered?
Income protection will provide a monthly benefit to the insured once they have been unable to work for longer than their waiting period due to ANY accident or sickness. There are no specific conditions covered - the main determining factor is your time off work due to the accident or sickness.

If you are unsure about the necessity of income protection, ask yourself this question: If you had the goose that laid the golden egg, what would you insure? The goose or the egg? For most people that answer is fairly simple, and if you would like a second opinion on your income protection policy, or a free consultation on your personal insurance plan, please contact Dominique Schuh on 5482 2855.
How long could you last if you lost your job, or worse, couldn't work at all?

Frighteningly, research from Zurich says nearly 60% of us would be looking behind the couch within three months, while a recent survey by an insurance comparison website found it was closer to half of Australians. Of course, this data comes from fairly minimal surveys sizes, but these often consistent findings do point to the high levels of risk many Australians carry.

Unfortunately, our elevated house prices are underpinned by high debt levels â€" our housing debt to disposable income is still near an all-time high, around 140%. Go back fifteen years ago, to 1999 and it was 76%. These kinds of debt increases are further partnered with other ongoing commitments that quickly drain the weekly income.

Forget your house or car, generating the income to pay for them along with the food on your table (and all the other bills) is your most important asset.

The two most obvious options to protect yourself are a consistent savings plan and insurance.
However, saving won't be anything more than a short term bridge because it would often be impossible to save what insurance could cover in the event of illness or injury. When it comes to considering insurance the worst thing to think is "it can't happen to me". Walk into any hospital and you'll find people in shock that a permanent injury or serious illness has struck them down.

In Australia while cancer and cardiovascular disease deaths are down, more people are living with their after-effects, which inevitably impact their employment and ability to earn enough income to meet their financial obligations. For a 40 year old male there's a 28% chance they'll suffer a disability or medical trauma by 65, while for a 40 year old female there's a 23% chance.

No one knows if (or when) they may suffer a serious health issue, but everyone can plan in the event of it. It might remove that concern about what happens after three months without an income.

If you'd like to talk more about how life or disability insurance can provide you and your family with peace of mind, please contact
Dominique Schuh on 07 5480 4877 or dominique.schuh@schuhgroup.com.au.
The biggest financial asset for most people is not their family home, their superannuation or a car but the ability to earn an income. But while most Australians have car insurance, only 39 per cent have life insurance and even fewer (23 per cent), have income protection.
Insuring your salary will provide a monthly income if you are unable to work due to sickness or injury.



In the past, policies typically paid 75 per cent of a salary for two years. These days, many products offer longer benefit periods up to age 65, with up to 75 per cent of your salary paid monthly (80 per cent of your salary if superannuation guarantee payments are covered).

A 35-year-old male on the average wage can expect to earn $2.5 million up to retirement age. But if he suffers a prolonged illness or disability that prevents him from working, who will pay his mortgage and support his family?

The Federal Government provides a limited safety net in the form of the disability pension but this would not meet more than the most basic of living costs. On such a pension, a permanently incapacitated 35 year old would receive a total of just $700,000 until he retired compared with up to $2 million if he had bought income protection.

One way to work out how your family would cope with the loss of the main breadwinner's income is to add up your cash savings and holiday and sick leave entitlements. It is estimated that 19 per cent of Australians could only manage to get by for a month and 11 per cent would not last a week!

Workers' compensation insurance may come to the rescue if you are an employee and are injured at work, but it does not cover accidents or illnesses unrelated to your job.
Plus, it is difficult to predict the amount you might receive even if you do succeed with a claim. Workers' compensation is designed to provide weekly payments in lieu of wages or a lump sum to compensate for permanent impairment. The exact payout amount depends on the state you live in and often involves a lengthy claims process or legal intervention.

To preserve your family's way of life at a guaranteed level of income, it is crucial to have an income protection policy. Some superannuation funds offer this cover but the benefits can be limited. However, if you are short of cash, the premiums for an income protection policy can be paid through your super fund with the money in it.

Income Protection Offers Tax Advantages

Income protection benefits are taxable, but premium payments for cover outside super are personally tax deductible. Say you earn more than $80,000 and pay a tax rate of 37 per cent, you could save the equivalent of 37 per cent of your insurance premiums after claiming a deduction.

You can also reduce the cost of premiums in other ways. You can extend the waiting period before claims are paid, reduce benefits or reduce the maximum period that benefits are payable. The cost of cover also depends on your age, gender, occupation, health and smoking status.

Martin's Story

Martin, 35, was a product manager at a major retail chain earning $65,000 a year. His wife, Melissa, had recently returned to work part time when their youngest child started school. The couple had a mortgage of $300,000 and hoped to send their two daughters to a private secondary school.

Then one day, their lives were turned upside down when Martin came off his motorbike and injured his
spine. He spent six weeks in hospital and was unable to return to work for nearly 12 months while he had intensive rehabilitation.

Luckily, Martin had taken out income protection insurance when Melissa gave up full-time work to care for their girls. Under his policy, Martin received 75 per cent of his pre-injury salary, or $4000 a month after a waiting period of 30 days. His insurer paid him $48,000 in one year and he could have continued receiving payments until age 65 if he was unable to work again.

You can imagine the peace of mind this afforded the family at what was already an incredibly stressful time.

If you'd like a free consultation about your insurance needs, please contact Dominique Schuh on 07 5480 4877 or dominique.schuh@schuhgroup.com.au
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