Husband dies, wife and kids are forced to sell family home
The Situation: A couple with two young kids recently upgraded their family home. The mortgage is $2 million.
The Risk
Like most people, they just ticked the “default” box on their industry super fund years ago. They only had $400,000 in cover. If the husband died, his wife and kids would be left with a $1.6 million debt they couldn’t possibly pay on one salary. They’d be forced to sell the family home to keep their heads above water. single event
Like most people, they just ticked the “default” box on their industry super fund years ago. They only had $400,000 in cover. If the husband died, his wife and kids would be left with a $1.6 million debt they couldn’t possibly pay on one salary. They’d be forced to sell the family home to keep their heads above water. single event
The Fix
They purchased a tailored $2 million life & TPD policy.
They purchased a tailored $2 million life & TPD policy.
The Result
If the worst happens, the mortgages are paid off in full. The family keeps the house, and the investment properties stay in the portfolio to provide a debt-free income for the kids’ future.
If the worst happens, the mortgages are paid off in full. The family keeps the house, and the investment properties stay in the portfolio to provide a debt-free income for the kids’ future.
Employee loses “work funded cover” when she leaves job, leaving mortgage exposed
The Situation: An employee at an accounting firm has a $1.5 million mortgage. She felt safe because her job provided life insurance as a “work perk.”
The Risk
That cover was tied to her job. If she quit or got made redundant, her insurance would vanish instantly. She had no other cover.
That cover was tied to her job. If she quit or got made redundant, her insurance would vanish instantly. She had no other cover.
The Fix
She set up her own personal policy that isn’t tied to her employer.
She set up her own personal policy that isn’t tied to her employer.
The Result
Her cover is now “portable.” It follows her whether she stays, leaves, or starts her own business.
Her cover is now “portable.” It follows her whether she stays, leaves, or starts her own business.
Business owner’s partner dies, can’t pay out partner’s widow
The Situation
Two friends co-own a packaging business and the warehouse they run it out of. They didn’t have a formal “what if” plan in place.
Two friends co-own a packaging business and the warehouse they run it out of. They didn’t have a formal “what if” plan in place.
The Risk
If one partner passed away, his half of the business and the warehouse would go to his wife. The surviving partner would suddenly find himself in a “forced partnership” with his friend’s grieving widow – someone who doesn’t know the business and likely just wants her husband’s equity paid out in cash. To get that cash, the survivor might have to sell the warehouse they work out of.
If one partner passed away, his half of the business and the warehouse would go to his wife. The surviving partner would suddenly find himself in a “forced partnership” with his friend’s grieving widow – someone who doesn’t know the business and likely just wants her husband’s equity paid out in cash. To get that cash, the survivor might have to sell the warehouse they work out of.
The Fix
They set up a “Buy-Sell” plan funded by insurance.
They set up a “Buy-Sell” plan funded by insurance.
The Result
If one partner passes away, the insurance pays a lump sum directly to the widow to buy out her share fairly. The surviving partner gets 100% ownership of the business and the property, and the widow gets the cash she needs. No “fire sales” required.
If one partner passes away, the insurance pays a lump sum directly to the widow to buy out her share fairly. The surviving partner gets 100% ownership of the business and the property, and the widow gets the cash she needs. No “fire sales” required.
Employee runs out of sick leave, can’t meet mortgage repayments
The Situation
An employee owns a family home and two investment properties. Between his own mortgage and the “shortfall” on his rentals (where the rent doesn’t quite cover the interest and rates), he needs at least $8,000 a month to keep his portfolio running and his family home secure.
An employee owns a family home and two investment properties. Between his own mortgage and the “shortfall” on his rentals (where the rent doesn’t quite cover the interest and rates), he needs at least $8,000 a month to keep his portfolio running and his family home secure.
The Risk
He has two weeks of sick leave and a month of annual leave accrued at work. Once his leave is gone, his income drops to zero. While the rent still comes in, it isn’t enough to cover the full mortgage payments. Within a few months of being sick, he is forced to sell his investment properties in a hurry just to stop the bank from foreclosing on his family home.
He has two weeks of sick leave and a month of annual leave accrued at work. Once his leave is gone, his income drops to zero. While the rent still comes in, it isn’t enough to cover the full mortgage payments. Within a few months of being sick, he is forced to sell his investment properties in a hurry just to stop the bank from foreclosing on his family home.
The Fix
David set up a personal Income Protection policy. He chose a plan that pays him a monthly benefit (up to 70% of his salary) if he’s unable to work due to any injury or illness. He ensured the policy would keep paying him all the way to age 65 if he was never able to return to his career.
David set up a personal Income Protection policy. He chose a plan that pays him a monthly benefit (up to 70% of his salary) if he’s unable to work due to any injury or illness. He ensured the policy would keep paying him all the way to age 65 if he was never able to return to his career.
The Result
If he’s off work sick, the insurance company steps in where his employer leaves off. The monthly check covers his personal mortgage, the investment shortfalls, and the school fees. He can focus 100% on his recovery, knowing his property portfolio is “self-funding” until he gets back on his feet.
If he’s off work sick, the insurance company steps in where his employer leaves off. The monthly check covers his personal mortgage, the investment shortfalls, and the school fees. He can focus 100% on his recovery, knowing his property portfolio is “self-funding” until he gets back on his feet.