kristopher

Andrea’s Claim

· ·

Andrea’s Claim – An Insurance Claim Case Study By Kristopher Meuwissen

 

*Names changed for privacy

What I’m about to tell you is the story of the first ever claim on insurance that I helped one of my Melbourne clients through. I was much younger then and predominantly giving insurance advice to clients.

I started working with a mother of two aged in her 40s, let’s call her Andrea. Andrea had a small loan against her home with a young family of two daughters, who were in their mid to late teens. Andrea was recently divorced. This meant that Andrea was the sole breadwinner of her family and household.

Andrea decided to take the step and get a full financial plan done, which we covered things such as her wealth plan, her insurance, as well as a retirement plan. When it came to her insurances we were covering her for income protection, life insurance, total and permanent disablement, and also trauma insurance. This all took place in about 2013.

Everything was going beautifully and smoothly for about two years. In 2015, I called Andrea and asked her how things were going, and to organize a time for us to sit down and review her circumstances, to check in to make sure that she was on the right track with her financial plan. It took me a little while to actually get a hold of Andrea, I’d called her a number of times prior to her answering the phone, and it had always gone to voicemail. Finally Andrea actually answered the phone. Andrea then told me something, and I’ll never forget the way that I felt.

Andrea told me on that phone call that she had bowel cancer, and whilst it wasn’t really extremely serious, that she was currently receiving treatment for it, and it looked like the doctors were going to have to operate. Andrea asked me if it was okay to postpone our review during this period of time as she just didn’t feel well enough to sit down and go through a financial plan. After initially being taken aback and being a little bit lost for words – because I’ve never had a client who had had a serious illness before – I asked if she was okay and what the prognosis was. She told me that whilst it was in its early stages, it was still very serious, and everyone was quite worried, herself included, and she was very distressed and very upset, and was also out of work for quite a bit and was only able to work a little bit at a time. I asked her a few medical questions about her condition, what it was called, and how much it had progressed, what her doctor said the prognosis was, had she seen a specialist, and straightaway after the phone call, I told her I’d call her back in the next hour or so, and have a look and see if there was something that we could do for her.

I called her insurer, who at the time, I believe, was AMP, and asked them if she had a claimable event, as it was a cancer, to which they replied that she had a claimable event under her trauma insurance as well as her income protection. I organized the paperwork to be sent to our office and prefilled in and gave Andrea another call.

I called Andrea and told her that she was going to be able to claim on her insurance, and the claim amount was going to be over $100,000 for the trauma policy, which is going to be tax free, and the income protection was going to pay her from the point that she was unable to start work, after a waiting period. She had a waiting period of one month, and so they were going back pay her two months’ worth of income protection payments, and then continue to pay her until she was back working full time.

Andrea, understandably, was beside herself. She was really upset on the phone and crying with tears of happiness that she was now able to take all the time off work and stop worrying about when she was next going to get paid and what was going to happen. It meant that she was able to wipe out the last little bit of her loan with an extra fifty-odd thousand dollars after the fact, that she was able to spend on making sure that she was getting better, and making sure that she was looking after herself.

She was also getting paid the income protection, which meant that her regular expenses were getting paid for, and she was able to keep on top of things during that period of time. Andrea in the end was very fortunate, and her bowel cancer claim didn’t go on for too long. She stopped claiming after 6 months when she was able to get back to work, and her cancer was in remission after her treatments.

The insurance payment allowed her to take the time and not worry about money. She was able to get better, help herself, and springboard into the next chapter of her life. Afterwards, Andrea had paid off her mortgage, had recovered from her cancer scare, she was able to reinstate her trauma insurance, and she still had upwards of $40k left over which she was able to put towards an investment account that she could start contributing to.

Insurance is not there to put you in a much better position than what you were in prior to claiming on it, and it is never a preferable option to have to claim. We always want our clients to be fit and healthy, but it is a bittersweet feeling to see a client get through a terrible event in their life without having huge financial burdens.

It really makes the process of the insurance worthwhile.

Have some questions? Want to know how it applies to you? Want a review of your personal situation? Click here to book a Free 15 Minute Discovery Session, give us a call on 1800 577 336, or email us at hello@wealtheon.com.au.

Wealtheon Winter Wrap Up 2020

· ·

Hey guys,

As we move into the much warmer weather of spring, we thought we’d look back on Winter 2020 and share our thoughts on this season.

This year has been a rollercoaster of financial, emotional, personal, and political events. Whilst sometimes it feels as though the last three months have been nothing but difficult and bad news, there’s also loads of positives and strengths coming out of it and launching us into spring.

Check out our market update, including what’s going on domestically and globally, as well as a bit of what to look forward to moving into the new season.

As always if you have any questions or want a chat just let us know.

 

Wealtheon Winter Wrap Up 2020

 

Market Update:

Great investment growth with most of the larger global markets growing between 5 and 8% in the last 3 months alone, with Australia included. Most of the world has brushed off a lot of the bad news about COVID-19 which I think is premature. Whilst I think that markets are reasonably valued, they are valued as such based on the hope that Australians can get back to work relatively quickly, and the COVID threat can be knocked on it’s head in a reasonably short amount of time.

I see some risks in the market, with continued high unemployment rates, and a current over-reliance on JobKeeper and JobSeeker from the current unemployed or stood down workforce. If we don’t see people getting back to work after Christmas and getting close to previous output, we might see some domestic market shocks, with the international listed markets providing a greater outlook for growth, provided that current global stimulus continues across a lot of the overseas markets.

Property market has remained relatively stable in most major cities. Whilst that is a strength, there are couple of weaknesses in that there has been a decline in demand and in foreign real estate investment and residential development meaning that there is a housing shortage looming, which sounds good in the short term for housing prices, but isn’t good for the broader economy.

Personal Update:

Personally Lauren and I have changed our headquarters from the Whitsundays to Victoria. We are still going to have a very strong presence in the Whitsundays, so nothing changes from the way that we work together as we can do everything online, and so long as numbers continue to fall, we hope to be back up in the Whitsundays by January or February next year. Looking at new business opportunities and maybe taking over a new practice in the new year, so watch this space as it may mean some extra services and we’ll keep you informed of anything along the way.

Interesting tit-bits we’re seeing:

Politics both at the state, federal and international level. There’s so much happening right now that I don’t envy any government leader, especially Daniel Andrews in Victoria because there doesn’t seem to be a right answer and governments at the moment are caught between trying to provide good health outcomes and protect people against COVID, but also ensuring that business and trade keeps moving and allowing the economy to springboard with relative ease.

Internationally we’re keeping our eyes on disputes with China, as they have been throwing their weight around on a few trade issues such as barley, beef and now they’re talking about putting sanctions and tariffs on Australian wine. This is concerning as it seems China is systematically targeting some of our most reliant export goods at a time where we’re not equipped to really retaliate. Former Australian prime minister Tony Abbott has just been placed in a key position in the UK’s department of trade and foreign affairs which is really good news and is fuelling rumours of greater UK and Commonwealth trade collaboration.

One of the biggest causes of opportunities and threats in global politics is obviously the November USA election. I still haven’t made up my mind as to what I think would be the preferable option, and this isn’t because there is a multitude of good options out there, I think that both potential outcomes of either a democrat or republican win is going to have severely polarising repercussions, and we have no idea what the fallout of these events will be. Watch this space.

If you’re feeling any concerns or hesitations about current domestic or international market conditions, please give me a call and we can discuss your investments and how you’re current positioned in the market, and we can make any changes if we need to.

Sources:

Case Study: Tim & Sally Starting Out

· ·

Case Study: Preparing for Life Events – Tim & Sally Starting Out
By Kris Meuwissen

 

Planning for your future – it is important to seek the help of a professional

 

Tim and Sally, both in their late 20s from Melbourne, sought out the assistance of the team at Wealtheon – not really knowing what a financial planner did let alone understanding why they may need one, one of their friends referred them to Wealtheon and they thought ‘why not’…

Tim and Sally were both very ambitious and worked hard in their careers so they thought that it is the right time to get professional advice on what they should be doing to set themselves up for their future. Between them they earned more than $270, 000 a year however at the end of each month there never seemed to be any funds left over and they had no real understanding of where their money was going.

When I met with Tim and Sally, their biggest objective was to buy their first home. They were currently renting a two-bedroom unit, didn’t have a lot of nice possessions and shared the one car, which was already 10 years old. At the time of meeting with Tim and Sally, they had no savings between them so they knew that buying a house would be next to impossible without some savings behind them. This is what motivated them to seek out my assistance – they needed a professional to help them with their budget and to plan out the steps they need to take to achieve their financial goals.

Firstly, I worked with them to build their budget and to ‘own’ their current financial situation. Despite not having much savings behind them, we discovered that they are not actually living an expensive lifestyle. They had worked hard to pay off their HECS debts and to go away on some wonderful holidays. Seeing as though their day-to-day expenses were quite minimal, I immediately advised them to start living off one income. After only two months they had already saved over $30,000.

The next step was to use this $30,000 as a healthy deposit for a property. I stepped them through exactly what they may need and who they should be talking to regarding finding their first home. I referred them onto one our Strategic Alliance Partners in the mortgage broking industry so that we could get the ball rolling on arranging pre-approval so that we knew exactly how much they could borrow. This also provided them with an opportunity to demonstrate their strong savings record and their strong credit history as they had always paid off all of their credit cards and their HECS debt.

The next step was to work out a financial plan that would enable Tim and Sally to fast track paying off their mortgage so that they can have the bulk of the home loan repaid before they thought about starting a family. We worked out a budget for them to follow once they are living in the home so that they were encouraged to stay on the right track.

Tim and Sally also expressed their desire to simplify their current superannuation set up. It turned out that they has at least three funds each, that they knew of, and this lead to a significant amount of paperwork as well as uncertainty that they were effectively planning for the future with a strong superannuation fund. I immediately recommended that they consolidate their super into one fund and I also recommended that we assess whether they have enough life insurance within their superannuation to cover the debt that they were taking on by buying their first home.

I walked them through their additional life insurance needs and determined that it would be very beneficial for them to commence income protection insurance to further cement their monetary security. It is important to ensure that all of the correct insurances are in place when you are entering into this stage on your life.

 

Have some questions? Want to know how it applies to you? Want a review of your personal situation? Click here to book a Free 15 Minute Discovery Session, give us a call on 1800 577 336, or email us at hello@wealtheon.com.au.

 

Disclaimer

Kristopher Meuwissen is an Authorised Representative No: 466483 of Lifespan Financial Planning Pty Ltd AFSL: 229892. The purpose of this document is to provide general information only and the contents of this document do not purport to provide personal financial advice. Wealtheon strongly recommends that investors consult a financial adviser prior to making any investment decision. The contents of this document does not take into account the investment objectives, financial situation or particular needs of any person and should not be used as the basis for making any financial or other decisions. The information is selective and may not be complete or accurate for your particular purposes and should not be construed as a recommendation to invest in any particular product, investment or security. Lifespan and its Authorised Representatives do not accept any liability for any errors or omissions of information. The information provided on this document is given in good faith and is believed to be accurate at the time of compilation.

How to Stick to a Budget and Still Have a Life

· ·

How do you stick to a budget and still have a life?

This is a massive head scratcher for people! I speak to so many people about budgeting and their biggest fear is that they are going to have to go without. It’s a funny fear isn’t it? Because you want to spend the money now rather than save it for later, you might even be using a credit card or personal loan to supplement your spending. It really is robbing Peter to pay Paul.

Once you know what you consider to be a success, you can prioritise. The only bad budget is the one that doesn’t achieve your interests so lets put that into an example.
If you are spending everything you earn each fortnight and focusing on the “now” spending, but retiring early is one of your biggest priorities, then maybe your budget needs to push you to meet your goal of retiring early.
 
If you define success as having money to burn each week and you don’t want to think about your future then your budget needs to reflect that (and probably does). In my opinion, never putting anything aside for later is self sabotage, but you are the only person who can make that decision.
 
So how do you get the best of both worlds? A decent life now that doesn’t take away from your decent life later? If a budget is all about planning out your cash flow to give you the greatest chance of success, what we really need to do is define success to you. This is where is gets a little more complicated.
 
1st, you need to work out what you need to save to have your decent life later. This can be very complex and you may need to speak with a professional to really define the monetary number.
 
2nd, you need to be aware… aware of what it costs just to live as you and also what most other people spend.
 
3rd, you need to define what the absolute “must haves” are in your life.
 
4th, it becomes a simple math problem. Your take home pay – your savings – absolute costs = decent life spendings.
 
5th, prioritise, prioritise and prioritise! If going out for beers is your thing, no problem, but if you spend that left over amount and you don’t have enough for take out later in the week, don’t get disappointed with your beers purchase.
Make sure your spending doesn’t give you buyers remorse and you will have your cake and will be able to eat it too!
 
Have some questions? Want to know how it applies to you? Want a review of your personal situation? Click here to book a Free 15 Minute Discovery Session, give us a call on 1800 577 336, or email us at hello@wealtheon.com.au.

What the Tax?

· ·

By Kristopher Meuwissen

What the Tax? is a short article examining and deciphering solutions for tax reform in Australia.

The need for tax reform

Australians don’t mind paying tax. They just don’t want to pay more than they have to. We all agree that paying tax affords us a great healthcare system, welfare for those who need it and other crucial services but over the last 20 odd years we seem to have created a tax system of the ‘haves and have nots’.

So many people I meet are so concerned with reducing their tax they are willing to go into hundreds of thousands of dollars’ worth of debt just to save a few thousand dollars.

What I am talking about is negative gearing and most people are so excited that the strategy might save them $5,000 that they overlook the risks involved.

A friend shared an article with me written by Michael Pascoe from the New Daily. The subject of the article was around how the government-mandated increase in minimum wages was more of a boost to the government than to workers. As I was reading the article there was something that smacked me in the face like a ton of bricks.

Our tax system is too complicated and has major gaps.

Previous attempts at reform

Every government has tried to make their mark with tax, adding things here, giving breaks there but we haven’t really had serious tax reform in this country since Howard’s 1998 “referendum on the GST” election win, which saw the introduction of the GST as well as a change in the personal and corporate tax rates.

Successive governments have since tacked on and removed tax after tax to a point that now the tax system is so overloaded and complicated that the average person would need a degree in taxation and accounting to work out if they would be better or worse off by working an extra shift each week.

With such an over-complication, people are claiming things they shouldn’t and actively looking to minimise (and sometimes avoid) their tax by trying to take advantage of precarious tax loopholes and getting paid in cash or other potentially illegal things. Most of the time they don’t even know they are doing the wrong thing or don’t understand the consequences.

We need to make our tax system simpler and fairer.

The current model

According to an article from PWC (Price Waterhouse Coopers), Australia has a whopping 58.8% reliance on income and corporate tax revenue, which is the second highest in the OECD. What this means is that there is a huge amount of potential room for a shift away from high personal and corporate tax rates. Also mentioned in the article is that Australia only derives 12.2% of tax revenue from consumption taxes such as the GST.

An interesting point to also note, is that the Henry Tax Review, published in 2010, identified consumption taxes as the most ‘efficient’ form of taxes. It also cited in an OECD report which found that a 1% switch away from income taxes to consumption taxes (eg land tax) would improve long-run economic growth per capita by 2.5%.

What can we do?

By moving away from high corporate and personal tax rates and generating more tax revenue from consumption, we will be able to make a fairer and less complicated tax system.

This model provides two major things to individuals and businesses. More money in their pockets that they can go out and spend (or keep as cash reserves) and more confidence that they are doing the right thing as well as paying their fair share.

While we’re at it, why don’t we make superannuation more attractive to lower income earners so there is more incentive for young people to prepare for their retirement? But that is an entire topic in itself, and one I will address another time.

We need to reduce the ridiculous number of loopholes, deductions and speculation, and replace it with a simpler, streamlined, progressive tax system with a greater reliance on consumption tax revenue.

This cannot be achieved without a long-overdue bipartisan plan for future tax reform – something that both sides of politics can move forward with regardless of who is in government. Otherwise the next 20 years will look much like the last 20 years, with higher regulation, compliance costs and tax avoidance.

 

Have some questions? Want to know how it applies to you? Want a review of your personal situation? Click here to book a Free 15 Minute Discovery Session, give us a call on 1800 577 336, or email us at hello@wealtheon.com.au.

 

Disclaimer

Kristopher Meuwissen is an Authorised Representative No: 466483 of Lifespan Financial Planning Pty Ltd AFSL: 229892. The purpose of this document is to provide general information only and the contents of this document do not purport to provide personal financial advice. Wealtheon strongly recommends that investors consult a financial adviser prior to making any investment decision. The contents of this document does not take into account the investment objectives, financial situation or particular needs of any person and should not be used as the basis for making any financial or other decisions. The information is selective and may not be complete or accurate for your particular purposes and should not be construed as a recommendation to invest in any particular product, investment or security. Lifespan and its Authorised Representatives do not accept any liability for any errors or omissions of information. The information provided on this document is given in good faith and is believed to be accurate at the time of compilation.