Insurance Q&A

today and lasting impact for tomorrow. Let's get into it.

And even though there's plenty of info out there on the Internet, we've found that it can all just be a little bit too much to wagh through on your own. That's why today we're dedicating an entire episode to Insurance, helping you to answer your burning questions about pretty much every type of insurance under the sun. My name is Georgia King, and joining me as she does each and every week, is financial Advisor, Miss Victoria Divine V. How are we hi?

But essentially, insurance inside subranuation is there to help obviously provide for you and your loved ones if something happens to you or you can't work anymore because of illness or injury, and it's usually offered through a default subranuation company or your employer sponsored super plan as cover their negotia for you and their other employees, which is called group insurance. And this is actually the number one way that Australians have access to affordable insurance. And the big

part here is without the need for underwriting. So underwriting is the process that you go through when you apply for a policy outside of superannuation and sometimes inside of superranuation. We're an underwriter who is somebody who works at insurance company and their job is to look at each and every single individual that comes into their insurance plan and says, all right, let me have a quick look at g. I want to see if she's going to be really

risky if we ensure her. Let's have a look at her history of illness and injury and see what she's like to insure, and then we're going to offer cover based on that situation. If you're somebody who works in a really risky industry, you might go, oh, my gosh,

like I have really limited superanuation options. We know that people in the sex work industry, we know that people in aviation often really struggle to get income protection insurance because insurants look at them and go, no, absolutely not. You're too risky. You're very likely to claim. Therefore, we don't want to ensure you. I have a client actually who's probably listening to this because she listens to everything. So Hi, my friend. But she is a traffic controller,

so she isn't even in a plane. She just sits in the tower every day directing planes coming in and out of Melbourne International Airport, and she's not able to get income protection because her job is deemed too risky for insurers to want to take it on. So one of the benefits of having these group policies is that you don't need to go through that underwriting process and

you can access it very quickly. But when you have insurance inside supbranuation, which sounds like a really sexy option because obviously inside supbranuation it's generally taxed at a lower rate than income tax, so you're saving some money. It's a bit of a money win. However, they're usually lackluster policies. I would say, so if you've got life insurance, instead of having the full amount of life insurance that maybe

Georgia you need, you have the default amount. And a good example of this is a client that I recently sent to my friend Phil, who a lot of you guys in the Shees on the Money community know because Phil is partnered with She's on the Money. I mean, he doesn't pay us. I just really like his business and what he does, and I no longer have the capacity to do all of this work, so I send a lot of it over to Phil Thompson at sky Wealth,

who does insurance only. So the thing I love about him is that, you know, this isn't meant to be like a Phil Thompson thing, but he'll love these g He'll listen to this and be like, Wow, you're so nice to me, And I'll be like never again, so never again. But the thing I like about him is it's really affordable to get advice from him. Instead of thousands of dollars, he's a couple of hundred dollars to do the advice for just your insurances, and that's a

much better position to be. And if you're like me, I can't afford full service financial advice, but I want a policy that only a financial advisor can access. And I also want a financial advisor's advice on exactly what I need or my family needs or whatever that is. And I think for like three hundred and fifty dollars or four hundred and fifty dollars, I can't remember, that's like his total advice fee. Obviously, then you have to pay for the actual insurance, but I think that's a

bit of a money in anyway. I digress, But essentially they usually lower policies. So an example of this is I sent someone from Cheese on the Money to Fill and they had one hundred and fifty thousand dollars of life insurance and they're like, that's a lot of money. But when we looked at it, they had two mortgages, they had two young kids, they've got a husband, and when we did their life insurance, they needed two and a half million dollars worth of cover because that's the

stage of life that they're in. And unfortunately the superannuation product had a cap and they were like, oh, you can only go out to five hundred thousand dollars and you can only claim for certain things, whereas a policy that made more sense to them, that was set up by a financial advisor makes more sense. So inside super I love that there's a default, and that means that so many of you just have cover already without even

having to think about it. However, it might not be the right fit for you and you might need to change it. So inside superannuation, you can hold income protection, you can hold life insurance, and you can usually hold some level of TPD, which is total and permanent disability. G please remind me, but what date did we do our personal insurances episode?

isn't the issue. It's the default cover. Because you might go down the road G talk to feel be like, hey, Phil need insurance, and he goes, great, you need a life insurance policy that's different, and you'll be like, thanks, no problems. He'll say, do you want me to just put in your super You're like, great, money win, no problems,

and you can sort that out. However, your default cover that you might have with your industry superfund might not be enough and it might not be comprehensive enough for you to go all right, well, I'm comfortable with this. The same is true for income protection. I spoke about this on that personal insurance episode. But often income protection policies that are held inside superannuation that are default have

a time cap. So that means that if you go of e, I'm fine, I checked, I do have income protection, you might actually only have an income protection policy that will pay you for two years. It won't pay you until the age of sixty five like a policy I have. And the reason that's so important is George, if I get injured at work and can never return to work again,

two years of cover is going to do nothing. I need to be covered until retirement age so I can still meet my financial goals and my life goals and still have a life, Whereas if I had relied solely on that two year policy that was inside my superfund, after two years, I'd be scrambling to work out what I was going to do if I was on a able to return to work. So I think it's really

important to understand the semantics around that. The only insurance you cannot hold inside superranuation is called trauma insurance, and to me that's quite an important one. But again it's kind of like the icing on the top. I would really prioritize getting income protection because it baffles me here in Australia that, g you'll insury your iPhone, you'll insure your car, you'll you know, we did a travel episode recently,

you'll go and insure the camera that you bought. That's you know, a couple of grand and I totally get that, but you don't look at yourself as an asset like you and your body are able to go to work every day, g and make money. That is your biggest resource. That is your biggest asset. Why aren't we protecting that? And that's what income protection does. So I won't go on and on, but essentially, insurance inside superanuation can be a little bit lackluster and not put you in the

best possible position. Holding an inside zuper is not a bad idea. It can be a bit of a money win when it comes to tax and what you pay. But it's all about being proactive and having a look at it and going is this serving my needs and what I actually need to get out of an insurance policy? And if you haven't reviewed it, I guess now is the time to do that, my friends? All right?

to apply for income protection. I'm a consultant, I am an engineer, I do whatever I do, and then going this is my income and this is how I've proven it. So usually you can't go straight out on your own and go, oh my gosh, I'm out on my own and I've organized my insurance. It's very unlikely that they'll accept that because they'll honestly, they'll just see you as unemployed at that point. However, if you've got a couple of years of tax returns and you've proven you our

ability to generate income, they're very likely to consider it. Obviously, you need to make sure that you're not a sole trader in an industry that doesn't have a good time

when it comes to income protection. However, I would again be talking specifically to a financial advisor and working out what actual insurances you need as a small business owner, because if you're a soule trader, you're a small business owner basically, and working out what other insurances you need because you might need like public indemnity insurance or any other types of insurance that are necessary for your industry.

So it really would be important to talk to a financial advisor or an insurance broker.

Rough time, really isolated. People were going online and getting telehealth appointments and organizing psychologists to talk through that because arguably we went through a traumatic event together, right. It was not easy. However, recently, I've had a few people put in insurance applications for income protection and it has come back from the insurer and they've said, look, because they saw a psychologist and had quote mental health issues, we're not able to give them cover for mental health.

So they give you what's called an exclusion, which is where they exclude a part of you from being insured. So they will say, look, gee, I'm not going to ensure your mental health, but I will ensure everything else. So if you stop work because you broke your leg and you no longer can come into the studio, we'll cover that. However, if you have to take time off and you're not able to work due to your mental health health, we won't be covering that, and you go, well,

that's a bit unfair. Exclusions do suck. They are very common. The insurance industry is getting so strict. Honestly, they are so behind from my perspective, in understanding mental health and understanding medication and what people go through. I mean, they're trying. It is a very dated industry in a way, but a lot of people are trying a lot of things. However, I think it's really important to understand that the earlier you get insurance, the less likely you are to have

an exclusion on your policy. So the older you get, the more likely you are to break things or have a bad back, or you know, twist your ankle at netball like I've done before. And I'm in the very grateful position where I got my income protection when I was quite young, So it was when I was first in the industry, like maybe twenty two year old. Victoria was like rearing to go. She got her income protection

and had absolutely no exclusions. However, I'm telling you right now, if I to apply for income protection, that would exclude my back because I sit at a desk all day and I go to a physio relatively often for massages and making sure that I stop getting these random headaches that I get. I also have a mental health care plan and I see a psychologist more regularly. I'm not saying I didn't need it. At twenty two, I was just a lot poorer and couldn't afford my mental health

care plan, so I wasn't doing it. But now I'm

in my thirties, I see a psychologist regularly. But because I see a psychologist regularly, and the reason I see a psychologist is, you know, noted down as depression and anxiety, I know for sure that I wouldn't have got income protection on that, which is really disappointing but so important to talk about because it's a really disappointing thing to happen when you've been working with a financial advisor and they come back and be like, hey, gee, so we

reviewed your circumstances and your application, and they spoke to your doctor and they're not willing to cover your ankle or you need or your back or this certain part of your back, or your mental health, and I just think it's it's a bit sucky. But essentially, if you're worried about income protect for pre existing conditions, the best thing you can do is actually talk to a financial advisor about it. See what insurers are the best options

for you, because different insurers have different policies. So I know that if I'm talking to a client and they have a higher BMI, I know that there are a few insurers I'll go down the road to instead of others because I know the breadth of what they will and won't accept just from experience, and a financial advisor is going to guide you through that. And then if you do have an exclusion, one of the most important things I would ask my financial advisor is, hey, Georgia,

I see I've got an exclusion. Is it ever going to be reviewed? Is this blanket? Like, is this something that's going to exist for the entire policy or at what point in time are they willing to review it? Because often I ask that question, like every single time I've gotten an exclusion, and sometimes the underwriter will come back and be like, oh, well, actually we can review that in two years if she has a clean medical record.

So then in two years you'll come back and be like, haven't had any issues with my ankle, haven't had to do anything. Can you guys please remove it? And they very likely will. So I think it's about just knowing what you can and can't do. But the biggest thing I would say there is it is not a bad thing to have exclusions because you're still getting access to the rest of that income protection policy. So you're covered for cancer and you're covered for everything else that might

potentially go wrong. And I think sometimes people throw their hands in there and go, well, if I'm not covered for mental health, like, what's the point, Like, because mental health is not the only reason. Yeah, my how to stop works. Yeah, there's a lot of other things that are included.

on that because I'm healthy and young. Like things happen to people every single day, and unfortunately in my industry because of what I see and what my actual job is, like I'm a part of that claims process, Like I have seen people in their late twenties be absolutely wiped out financially and their working capacity from things they never

foresaw coming. Like I had a client, and you know, he's a really good client of mine, one of the fittest guys you will ever meet, late twenties, was riding his bike through the Melbourne CBD got hit by a bus. He's okay now. That broke his pelvis, both his legs, a whole heap of ribs, and was not able to

work for a good eight months because you couldn't. Income protection saved him because he had a mortgage and two young kids, and that's the thing that enabled him to one take sickly from work but also be able to provide for his family. So for me, it is really important. It doesn't matter how healthy you are, because bad things happen to good people, all right.

G Like she's on the money has meant that my business can't take on any more clients at this point, So why wouldn't I promote the best financial advisors that I know? So it makes sense, but I would talk to a financial advisor. But I also believe this is so lame. But I believe that an income protection policy kind of chooses you because it's like a funnel. Right, we set out to understand what we need. We go

all right, well, what do we actually need? We might need a certain amount of cover that might push a lot of policies off the table because there are you know, a limited number that off of the amount that you need, it might be pre existing conditions. So you need to work with an insurer that actually will accept that or give you terms that make sense to you and your personal circumstances. In our insurance industry, BMI is a really big thing. I hate talking about this because I think

it's ridiculous. BMI I don't believe is a good indicator of health. However the insurance industry does. And if you've got a higher BMI or even a lower BMI, there are particular insurance companies that I would use over and above that. But you need to take your personal circumstances into consideration before you actually look at a company. You can't just head to a company's website and be like, oh, these guys look good. I'll look at their pds and

make sure they're fine. Because some policies have really good guynecological care. Others don't have that at all. There are other insurance policies g that only cover one type of breast cancer and not the other. So if you have the Bracker gene, which is the gene that is hereditary in your system. That means if you carry that, they might say absolutely not, We're not going to ensure you at all for breast cancer. However, there are other policies

that might consider that. So I think it's not necessary about which insurance policy should I pick, but more one of my personal circumstances that genuinely need to be taken into consideration here, because for me, I'm in my thirties. I've spoken about this honestly and openly. At some point, I would love to have kids. I want my reproductive system to be insured. I want to make sure that I'm okay in those circumstances. No, it doesn't pay for IVF and stuff like that, because I know that question

is coming. However, what if something goes dramatically wrong during childbirth? Am I covered for that? Or am I not? Because there are some policies that don't cover for that because technically, if you're giving birth, you're on maternity leave, and if you're not at work you're not covered.

we just don't see it as a priority. We're like, oh, nothing's gonna happen, it's fine, or I'll just move back in with Mum and dad if something happens, or huh, I'll just go into Centlink. And I mean, do you know what, there are some circumstances where you might do the pros and cons, and with your income, it might actually be less than what Centerlink is. So if you can't work, a disability pension might actually be your best

port of call. But that's a circumstance. You actually need to do the maths on and work out whether that works for you or not. But no, I don't think people are overinsured. I think they're underinsured. However, I think that we prioritize the wrong types of insurance, like yeah, we so likely to take out additional iPhone insurance, or like I went and bought new headphones the other day, and I really wanted some air pods because I've been using like fake air pods until now, which are terrible.

The quality is insane, Like, oh my gosh, it's insane that twelve dollars eBay headphones are not nearly as good as the two hundred and fifty dollars AirPods that I purchased.

But I splurged, right, and a checkout they're like would you like to extend Apple Care insurance for another two years for like this amount of money, and I was like, no, I would prefer to spend I think it was like sixty nine dollars or something, whereas I'd prefer to spend that on a trauma policy or on something that protects

It's me. I don't need to protect my headphones. And I totally get if other people see the value in that, and like you do you However, I just think that we prioritize the wrong things, Like it doesn't make sense to me that someone will go and insure their air pods and not insure their person.

more access you have to different things and opportunities. I think it's just about being educated and understanding exactly what your policy is and what it's made up of, and understanding what the market's doing, and talking to your advisor and saying should I do this or shouldn't I do this? However, you know, if you're in a position, gee where you've had hysterectomy for some reason, I wouldn't want to be paying for reproductive health if I had gone through that.

I think it's just important to have a look at something and understand what benefits you and what doesn't. Because hysterically g I have seen people come into our office sit down and I'm like, oh my gosh, what have you got? And they've got like these epic policies. This was a fair few years ago, and it wasn't my client.

It was a financial advisor in my officer's client and he reviewed these client's insurances and he had maternity cover and like full like childbirth cover and all of this other stuff, and we were like, buts mail, Like this makes no sense, and like, obviously I'm not being insensitive here. We knew for sure that this client was mail. It wasn't a question of like, oh my gosh, is there something that you know we're not privy to, because you're

very sensitive to those things. However, we're like, no, this bloke does not need this and called the insurance company. They're like, oh, yeah, it was default, Like, we can remove it. You're right, it would reduce his premiums and we're like, yeah, do that, but also please refund us for the entire time he has had that, because he shouldn't have been paying for that, and you guys know that. So it was kind of funny at the time, but

also really cheeky. So I think it's just about understanding what you're getting, having a chat to your advisor, and then like, what's the harm in giving your insurance company a call and saying, hey, guys, just got my premium statement in the mail. Any chance you can do a better deal than that? Otherwise I might look elsewhere and they might say yes or no or explain to you why your premium is such. But I think it's important to always ask questions, but always be educated as well.

But also on that g be really careful about changing your insurance company, because, for example, I could today go and get rid of my income protection policy and go get a cheaper one. It's a no brainer when it comes to the semantics of like what's cheaper. Right, However, I have an insurance policy that has no exclusions, has a whole heap of benefits for me personally. You know, it was written a long time ago, so I'm actually

completely covered. If I went and got a new insurance policy today, there would be exclusions, there would be a whole heap of things that, to be honest, is not worth changing. Like I'm not going to go get a cheaper policy because with insurance, it's actually about the quality of the insurance, not necessarily getting the cheapest cover, because that's not going to put you in the best possible position.

So would I go out and get the cheaper policy. No. Would I try and negotiate a better rate on my existing policy. Absolutely. So I'm in that tricky position where I don't want to change mine because I do have a financial advisor written policy that is in my best interests. However, that's where you want to have those conversations around is this what's best for me? Because we all know that. Mate,

that's like, oh, I don't need insurance. I just canceled it, like I don't need it in my souper and you're like, oh my gosh, like that was such a valuable thing to have. And even and if you don't want insurance inside super like another recommendation. If you want to save some money and you're just not sure about the super, lower the amount instead of being covered for half a million dollars, the call up and see what's the lost amount. I can be insured to keep that policy so that

I save some money. But also I'm not putting future me in a worse off position. So I think it's just important to know that you can dial things down and then later you can dial them back up. But if you cancel them completely, you could find yourself in a sticky situation.

financial decision. And we promise Victoria Divine and She's on the Money are authorized representatives of in Focused Securities Australia Proprietary Limited ABN four seven zero nine seven seven nine seven zero four nine AFOSL two three six five two three See You're on Friday, Guys, by Guys