Public Liability Australia News
Sun, 19 August 2007
MBF To List On ASX
MBF Australia said it intends to demutualise and list on the Australian stock exchange in an attempt to grow and diversify its business.
The health insurer said its plans have been endorsed by the MBF Council.
It said a share market listing is likely in calendar 2008.
The board believes that demutualising is in the best interests of policyholders, that it will maximise MBF's future growth potential and enhance its ability to compete in a rapidly changing environment," chairman John Conde said.
Mon, 25 February 2008
What is Public Liability Insurance?
Public liability insurance is an insurance policy which offers the insurer protection from people claiming compensation in the event of an accident or loss in or around their home or business. Thus if there was an accident on your property and someone were to lodge a compensation claim, then your public liability insurance policy will assist you with the payment of compensation. Public liability insurance may additionally offer the insurer protection against claims from trespassers as well as provide cover against injuries made by falling objects or people carrying out repairs.
http://www.netstarter.com.au
Tue, 04 March 2008
Why get an insurance quote
People who have the cheapest car and home insurance policies do so because they shop around for the best deals especially when theirs is coming up for renewal. For those choosing to accept their renewal quote each year, by letting your policy roll on you're probably paying far more than you need to when all you need to do is get a couple of quotes and see what deals are on offer.
It is usually the case that if you stick with the same insurer for more than 12 months you will be paying over the odds on your insurance because there are always insurers and insurance companies offering attractive low cost rates in order to entice new customers to their policies and most offer you online discounts.
There are now insurance policies which allow you to insure yourself against almost any eventuality. There's car insurance, buildings insurance, contents insurance, health insurance, life assurance and critical illness insurance. Mortgage payment protection insurance (MPPI) and even the family cat or dog can be insured.
Source: http://www.insuranceguideuk.co.uk/
Sat, 08 March 2008
Professional Liability Insurance: A Concept
Can you think of something that not only reduces your tension but also minimize your financial worries related to work? Professional liability insurance is an effective instrument that may reduce your work pressure to a great extent and help you to lead a tension free life in many ways.
Professional liability insurance is a kind of insurance policies that covers all your professional liability and worries while practicing your profession effectively. In todays world, the importance of liability insurance has increased to a great extent as more and more companies and professionals are seeking professional solutions for their problems. In many countries, it is impossible to practice without adequate professional liability protection. Therefore, professional liability insurance has been gaining popularity as it never had.
There are many professional liability agencies and companies that provide different types of policies that will help you in long term. You can check their quotations and terms and finally come to make the best decision to take the most beneficial policy or your company or yourself. Furthermore, you can search through the internet to check the usability of various professional liability policies provided by different companies around the world. Check their offerings well and you can easily make out some differences fro yourself.
Internet is the best medium to search out productive liability policies that may help you and your company to get the benefits of the prevailing time. Whether you a doctor, an architect, an engineer, a lawyer or any other professional, the good points of professional liability insurance is must for all. It will save to fight for any undesirable financial demands from any third party and will help you to protect your rights. The provisions of professional liability insurance differs from country to country and company to company, make sure you go through all the terms and conditions very well to get the benefits.
Source; http://www.ezine-writer.com.au/articles
Mon, 17 March 2008
Getting Started Buying or Building a New Business
(I) Buying a business
So you want to want to be an entrepreneur and strike out on your own. You want to be your own boss and you have experience in a particular field or a skill but feel more comfortable running an existing operation.
You see an opportunity to make more money. What do you do next?
(1) Find a business to buy. Places to look:
People you know who want to sell or retire.
Local newspapers. Check to papers that serve your town and surrounding towns, too.
Go online. Check sites that have businesses for sale like www.bizbuysell.com or
www.businessbroker.net.
Ask your accountant, attorney or friends. Tell them to keep you in mind.
(2) Ask to see their books and client list
Have your accountant check the books for the past three years.
Call at least ten clients to see if they're still current clients and what the reputation of the business is.
(3) Evaluate the business
For all businesses there is a formula to use in determining a business value. Example:
Take the Net income to the owner and multiply by three.
Purchase the client list and pay the owner a fixed price for each client who signs up with you.
Include or exclude business equipment. Make it clear what you want to buy. Don't assume.
(4) Make an offer
Use one of the proven methods to evaluate a business and make the owner an offer, which should
include the following:
Total amount you're willing to pay.
Down payment.
Timing of payments (monthly, quarterly, at the end of the year).
Financing, if necessary. You may have to pay the owner interest on the unpaid balance.
No compete clause. Make sure he's selling you all of the business and won't try to take back
clients once you sign the agreement.
(5) Write up a contract Have an attorney do it. Have it witnessed and notarized.
(II) Building a Business From Scratch
You've looked and can't find a business to purchase or you would rather start a new business without the hassle of negotiating over someone else's business and/or financing a purchase.
Are you ready to run a business? Do you have the knowledge to run the daily operations of a business as
well and perform the skills that people will hire you to do? This web site will help.
You need clients! How will you get them? Section Seven of this website covers advertising but there are several things you can do right away. Don't wait until you've opened the new business to get the phone
ringing.
See if any clients who work with you at your current job are willing to go with you.
Tell business owners who you would like to work with to call you at your new phone number.
(III) Make a Business Plan (Highly Recommended)
You'll need it, in conjunction with this website, to successfully start a new business venture. If you want financing you will need it. Sit down at your computer, fire up the word processor, and use the Checklist for Success to map out how you envision the company. Itemize the business services you want to offer.
Source: http://www.small-business-help-advice.com/New_Business.htm
Fri, 11 April 2008
Public liability insurance
If you are tired of searching around online for public liability insurance then we have the perfect solution! If you run are self employed or run a business then the chances are you have more than enough to do without the stress of looking for a comprehensive policy at a low price, for this reason we have created a specific quote system for liability insurance in the UK which will search for the best price from a panel of different insurers and provide you with a comparative quote.
Our quote system is available online 24 hours a day to provide you with a quotation for your public liability insurance from several different insurance companies. You could save yourself both time and money on your public liability policy by letting our automated system do the hard work of searching our panel of insurers for the lowest premium and/or excess and after this you might want to try out our automated system for landlords insurance which again searches many insurers on your behalf.
You may be wondering why you actually need a public liability policy, the main idea of this insurance is to cover yourself against a member of the public(for example a client you are working for) holding you liable for any injury or property damage you cause during the course of your occupation. A prime example would be if you were a builder and whilst carrying your equipment into the property you accidently knocked over an expensive item which the customer held you liable for the cost of repairing or replacing. Your public liability insurance also provide cover against the person holding you liable for injury, for example if you left your tools on the ground and the customer then tripped over them injuring themselves and held you liable.
Source:http://www.easypublicliabilityinsurance.co.uk
Wed, 07 May 2008
Liability insurance
Types of liability insurance you need to consider:
Public Liability
Public liability insurance protects you and your business against the financial risk of being found liable to a third party for death or injury, loss or damage of property or pure economic loss resulting from your negligence.
Professional Indemnity
Professional indemnity insurance protects you from legal action taken for losses incurred as a result of your advice. It provides indemnity cover if your client suffers a loss - either material, financial or physical - directly attributed to negligent acts.
Product Liability
If you sell, supply or deliver goods, even in the form of repair or service, you may need cover against claims of goods causing injury or damage. Product liability insurance covers damage or injury caused to another business or person by the failure of your product or the product you are selling.
Source: http://www.business.gov.au
Tue, 20 May 2008
Professional Indemnity Insurance
Business protection, by the experts, for the experts.
No matter what professional business you're in, client expectations of service and quality of advice continue to grow. That's good - it means we're all striving to improve on what we do. The down-side is the increasing number of claims for alleged negligence or breach of duty.
The need for professional indemnity insurance has never been greater. It's a 'must have' - without the right insurance, you're putting your business and personal assets at risk. It's not just the potential damages that may be payable, it's the cost of defending claims that may be made against you.
Source: http://www.aon.com.au
Thu, 29 May 2008
The 5 Common Mistakes Business Owners Make When Evaluating Their Insurance Requirements
Looking over your insurance premiums each year, you may be wondering how you could save a dollar or two on your next premium. As an intangible asset, it can be difficult to put a value on insurance ... until something goes wrong and you need to claim. Insurance specialist Brett Wrightson from Brian Bushell & Associates, highlights the five most common mistakes that business owners make when evaluating their insurance requirements:
Not Understanding Their Full Risk Profile
When reviewing your insurance needs, it's essential to sit down and determine what types of events could occur in your business that would create adverse impact. From there, you need to determine what would have the biggest business impact - in terms of dollars, time and effort. Then you need to work out how to ensure that you are adequately covered against these risks.
Often policy holders will do away with one part of a policy thinking that they can save money. For example, they will go for theft, fire and glass coverage, but not take out burglary even though it's a relatively minor additional fee.
It is Murphy's Law that the one thing you leave out is the one thing you need to claim for on your insurance. And it can be for the most oddest of items. The strangest story I've heard of is a fish and chip shop that was robbed of all their frozen fish. Although it was never proven, it was suspected that a competitor fish and chip shop, just around the corner, decided that they wanted a freezer full of product to sell without the set up costs!
Not Disclosing Everything!
Yes, it is true ... if you don't disclose everything upfront when you sign up your insurance policy, the insurance company is quite within their rights to not pay out on your claim. Worst still, they won't even refund your premium paid to date. Therefore, don't hold back. Disclose anything relevant to your insurance upfront to save any drama's at a later date.
nsuring Assets at Written Down Value Instead of Replacement Value.
It is essential that you insure your assets for REPLACEMENT value. In other words, how much would it cost you to repurchase the items insured at full price. A common mistake, particularly when purchasing an existing business, is to insure the assets at the "written down" (or depreciated) value, rather than replacement cost.
Being "cheap" on their premium
Don't get caught out by trying to save yourself a few hundred dollars on your insurance premium, to the detriment of being fully insured. Being cheap now could end up costing you thousands of dollars down the track.
Not listening to your insurance broker
Your insurance broker is the best person to advise you on insurance cover. Having seen many similar businesses to yours, they have seen other business owners go through the pain that you don't need to. Your insurance broker will know what works for your type of business and how to get it for the cheapest possible price. As an insurance agent, they know the ropes and can maneuver you through the subtleties in insurance policies which will save you dollars in the long term.
It's a quick, efficient and cheap way to grow your profits immediately!
Source:Tabitha Wellman
Thu, 12 June 2008
Insurance: Why worry?
During our lives all of us are exposed to the possibility of a variety of risk events such as:
Work accidents
Major illnesses
Death
House fire
Motor accidents
Theft
While death is of course inevitable at some time, some of the other risk events may never happen. Also the likelihood of some of these risks occurring may be greater at particular stages of our lives. For instance most major road accidents involve younger people while most major illnesses occur with advancing age.
Also at different times of our lives our financial plans and our dependents are more vulnerable to the financial effects of the risk events occurring. For example a family with young children, a large mortgage and only one breadwinner would experience tremendous pressure if the breadwinner became incapacitated for one reason or another.
The chances of being able to accurately predict when a risk event will happen are very slight. Occasionally there will be symptoms of the onset of a disease but usually these things come out of the blue.
Therefore, if our finances would be vulnerable to the consequences of a risk event, it would be wise to protect ourselves and our dependents against those consequences. This can be done in a number of ways, from taking steps to ensure that we are not endangered through to purchasing insurance that would compensate for the financial consequences of the risk event occurring.
Here are five steps that can help to manage personal risk:
1. Identify the risks that you are exposed to now and in the future.
You should look at the risks that may affect your body or that of your partner, such as death, disability, illness and the need for long term care due to aging. And you should consider risks from theft, fire and other misfortunes relating to any property you may have.
Another risk that some readers may need to consider is the risk that someone may decide to sue you for a loss that they consider you have caused them. This can particularly affect professionals and tradespeople. Often having adequate Professional Indemnity Insurance is a condition of operating in a particular field but if this affects you, you should ensure that your cover is adequate against likely successful claims.
2. Analysis of Risks.
The answers to the following three questions will provide a good basis for your risk management program:
What is the potential loss if the risk event occurred?
Who will suffer the loss?
How likely to occur is it?
The way they can work is illustrated in the following example:
Bill and Sue are in their early 30's and both have good jobs earning $50,000 and $40,000 respectively. They are paying $15,000 p.a. on the mortgage on their house and are saving $20,000 p.a., half in superannuation and half in other investments. Sue is about to leave the workforce to start a family and they need to consider what would be the impact of any reduction of Bill's earning capacity.
The answers to the three questions could be:
If Bill was completely incapacitated, the family income could reduce to zero, they could deplete their savings and in the worst case they could lose their house due to their inability to continue their mortgage payments. As well as their living expenses they need to consider the impact of medical bills which could make the situation worse. The situation could be eased if Sue were able to go back to work.
They would suffer these financial consequences directly. They could face extreme financial hardship which, of course, could drastically affect their child's future prospects. If Bill were to die he would not feel the financial effects himself but Sue would have to cope with the double whammy of financial disaster and grief at his loss.
In this instance, too much hangs on one person's health for it not to be vital to insure Bill against death and disability and to have good medical insurance for the whole family. However, his family medical history may give some pointer towards the need for particular protection.
Of course this is only one of the risks of death that this family is exposed to. They would also need to analyse the implications of any misfortune that could befall Sue. If she were to die or be disabled with a young family, the last thing Bill would need on top of his grief would be the extra financial costs of housekeeping and raising the children.
3. Reduction of Risks.
This is the process of doing something that will reduce the likelihood of a risk event happening. Again a set of three questions can be asked:
What precautions can be taken?
Are the precautions reasonable? (remember you have to live and
enjoy your life).
What will be the benefits of taking the precautions? These could be
reduced insurance premiums or other side benefits.
Often simple precautions like installing deadlocks or always locking the car can reduce the likelihood of loss quite considerably. And reducing weight, eating healthy food and giving up smoking can reduce the likelihood of early traumatic illness. You might even find that some of these actions (e.g. giving up smoking) can make your insurance cheaper too.
4. Consider Retaining Some Risk
It could be that the cost of obtaining protection might outweigh the benefits. Or the likelihood of the risk event occurring is very slight or its cost could be easily afforded. In these instances it may be prudent to retain the risk yourself, to self-insure.
Decisions on retention should not be taken until the previous three steps have been completed. It is also vital that we don't underestimate the consequences of the risk if we decide to self-insure. Remember we can't go back and tidy up once the event has happened. It is therefore prudent to get expert advice before taking this option.
However once a risk is identified, analysed and reduced as much as possible a rational decision to self insure may be considered. The questions to ask at this stage are:
If the event does happen what will be its financial impact? (can
you afford it?)
Can you afford the insurance premiums?
Can part of the loss be afforded?
Do the premiums represent good value?
5. Buy Protection Against the Financial Consequences of the Risk Event
When you have decided it would not be prudent to carry the financial consequences of the risk yourself you need to purchase appropriate insurance protection. This transfers the financial consequences of the risk event to the insurer and to compensate them for taking on that risk you pay them a premium.
The act of buying insurance does not reduce the likelihood of the risk event occurring but it does mean that the financial consequence is removed or reduced. In our earlier example, insuring Bill's life for a large amount will not reduce the likelihood of his death but it does mean that if that unfortunate event was to occur Sue and the family could cope financially.
The range of insurance cover that can be purchased is extremely broad. Cover for just about every conceivable risk is available. Some policies cover a number of related risks while others are very specific covering only the financial consequences of a very particular risk event. Some risks are covered by the policies of a number of insurers while for other more specialised risks only one or two insurers provide cover.
Different insurance policies provide a wide variety of different benefits which may include:
A specific lump sum of money.
A lump sum of money plus bonuses related to the company's
investment performance.
Cost of replacement of or repairs to a damaged or stolen item.
Provision of a stream of income
Meeting all or part of defined medical expenses.
Sometimes your premium will just buy cover for a particular period of time, at the end of which you have to renew your policy. In other instances the premiums are regular and may even have a savings/investment component built in.
Because the range of insurance on offer is so wide, you should shop around before you purchase. First you should find the policies on offer that cover the risks you need covered. Then you should read the policy to make sure that there are no exclusions relating to a particular risk you might face.
Also check that the benefits are in a form that will be appropriate should the risk event occur. And lastly you should look for the most cost effective of the products that would cover your particular risk need.
This can be very complex, so most people find it is very useful to purchase their insurance from an expert with specialist knowledge in that.
Source: Matt Davis
Mon, 23 June 2008
Business: Avoiding Loss with Proper Risk Management Strategies
Solid protection in the form of commercial insurance, should buildings, tools or materials become damaged, is important for company survival, and many individuals believe that having insurance coverage will replace losses in the case of fire, theft or accidents.
However, there are many financial considerations that office insurances cannot cover.
For example, while your business insurance might provide coverage to replace damaged machinery vital to your companys functioning, the lost productivity from the beginning of the accident to the end of downtime can mean serious costs that could be crucial to your companys survival.
Risk management strategies help reduce financial loss and avoid unnecessary failures of productivity that many businesses cant afford and shop insurance policies cant cover.
While full business insurance coverage is important and vital to the survival of a small company, knowing the risks and the consequences of downtime are imperative.
For example, a damaged piece of machinery can be replaced, but losing a client that didnt receive his shipment on time or having disgruntled employees that dont find their workplace conductive incurs long-term financial loss that most small business need to avoid.
Any financial impact to your small business affects its competitiveness and overall success.
When analyzing what factors need to be taken into consideration to minimize lost income, having solid, comprehensive business insurance is a must.
A professional advisor can help you choose which type of coverage and commercial insurance policy is best for your enterprise.
During discussions of office insurance options, ask your advisor about deductibles or excess that your business may have to absorb should an accident occur.
Always read the fine print of your policys coverage and know ahead of time what youll be facing if misfortune strikes.
Then, prepare a plan to deal with those risks.
Avoiding risk keeps your business competitive in the marketplace and helps maintain low costs and lost productivity.
Examining your businesss workplace for potential accidents or hazards and correcting the situation before something goes wrong can help prevent crucial financial loss.
Preparing a plan to deal with downtime minimizes the financial impact to your small business.
Also, knowing the potential risks your company faces can help you transfer these same risks to commercial insurance companies, reducing loss should your business suffer an upset in productivity.
Discuss risk transfer with your insurance advisor and be fully prepared to deal with financial losses beyond direct material damage.
Written by: Frank Hills
Sun, 29 June 2008
Do You Work For Your Money Or Does Your Money Work For You ?
The Poor Cash Flow Pattern
In order to understand the three basic cash flow patterns, you must first understand the difference between an asset and a liability. When you stop working for money, an asset is something that will put money in your pocket every month. A liability is something that will take money out of your pocket every month. This idea touches on the difference between earned income and passive income.
The first basic cash flow pattern is the poor cash flow pattern. Before most people even learn about money they want things, and so they learn first to work FOR money. As their income is earned it is just as quickly spent on their list of wanted items. The poor cash flow pattern has earned income flowing in and entirely back out to expenses.
It does not matter if you have a sizeable income, because money does not make you rich or poor. Money is just a tool. It is how you are managing the tool (money) that determines whether you become rich or poor. Even with a substantial income you are still poor as long as your focus is only to earn your income and pay your expenses.
You may make $500,000 a year, you may have enough income to cover all of your expenses, but if you were to stop working for money you would quickly realize that you are poor, and the idea that you were not was just a temporary illusion.
The Middle-Class Cash Flow Pattern
Eventually people get tired of this routine and begin to gain better understanding and control over their expenses. Enough time spent focused on working for money may produce extra income in the way of a raise or a promotion.
Most people still have not spent any time to financially educate themselves, so they don't know what to do with the extra money. They don't have any ideas of their own about financing their retirement, either. The extra money is usually used to buy a newer car, a bigger house, and anything left over usually accumulates as savings. Eventually most are sold on putting the extra money into a portfolio for their retirement, usually consisting of mutual funds.
These purchases make life more comfortable, and so feel like assets...but they create an expense every month for a very long period of time. The misunderstanding is made worse by bankers who ask you to list your cars and home as assets against loans. By definition, these purchases are liabilities.
The Wealthy Cash Flow Pattern
A change of focus to passive income leads people down the path to a wealthy cash flow pattern. When you look at the pattern of the wealthy you may notice- they do not get their income from a job. Their cash flows in from assets.
Imagine spending your time figuring out a process that will automatically produce some income for you every month. Now imagine duplicating and improving upon that process until it automatically produces your ENTIRE income every month. Finally, you will stop working for money. That process is a business, and that income is a passive income.
From that point forward you will be financially independent. You will not work for money, you will have money working for you. It might take you 2, 3, or even 5 years to establish a system to that point, but once you do you can retire. Once you retire, you have all of your time to spend however you like.
This is the reason understanding the three basic cash flow patterns is so important. These patterns demonstrate the reason why you can become financially independent in just a few years working at a seven dollar an hour job. Your biggest obstacle in the beginning is controlling your expenses and changing your focus from earned income to passive income. Once you have become committed to these fundamental ideas, only persistence stands between you and great wealth.
Written by: Frank Hills
Mon, 07 July 2008
Reducing Your Insurance Rates Dramatically -- 4 Time-Tested Tips For Any Policy
There are many different ways you can save in different insurance policies.
However, some things that will help you save in one policy will have no bearing whatsoever on another policy.
Here are things that will help you save across all insurance policies...
1. If you want a discount, get your health insurance policy from the same insurer you bought your other policies from.
Every insurer will typically offer a discount if you buy more than one policy from them.
Nevertheless, all the money you may get as discount may still be much lower if weighed with savings you'll make by getting your policies from several insurance companies.
2. Take it upon yourself to ask your agent or broker about all the discounts available to you with your present insurance carrier.
There's a possibility that your broker has left one or two out.
The only way to be sure it's false in your case is by taking the time to ask your broker to list out all discounts that your insurer offers.
Do not be surprised if you discover discounts that you've never heard of.
3. You'll attract cheaper rates if you opt to pay your premiums yearly and not monthly.
Yes, monthly payments might be stressless but it is also less affordable.
There are transaction fees that are incurred when processing a check. .
While a yearly payment attracts a single check and therefore a transaction every year, monthly payments attract twelve.
You'll then have to pay the total of twelve transaction charges.
Apart from this there are also administrative costs that are incurred due to the monthly payment option.
A clear example of such is the cost associated with sending out payment notices.
All such cost to your insurer is eventually borne by you (that's in addition to their own profit margin for providing such a "convenient" option).
4. You will reduce your health insurance rates by a huge margin if you take out time to do extensive and thorough shopping..
You will start your shopping right if you make inquires from friends about their experiences with different health insurance carriers.
Doing this helps you avoid being led to just the provider with the biggest hype but to the carrier that gives the best price/value.
An acquaintance is more likely to tell you if they had an unpleasant experience with a provider.
If you ask your friends and acquaintances - you'll hardly buy from a bad insurer.
5. You might save some hundreds of dollars by simply obtaining and comparing quotes from about five insurance quotes sites. And, it will require just a total of 25 minutes.
Written:Matt Davis
Sat, 12 July 2008
The Weird and Wonderful World of Insurance
A lawyer in Charlotte, NC purchased a box of very rare and expensive cigars, then insured them against fire among other things.
Within a month, having smoked his entire stockpile of these great cigars and without yet having made even his first premium payment on the policy, the lawyer filed a claim with the insurance company.
In his claim, the lawyer stated the cigars were lost "in a series of small fires."
The insurance company refused to pay, citing the obvious reason: that the man had consumed the cigars in the normal fashion.
The lawyer sued....and won! In delivering the ruling the judge agreed with the insurance company that the claim was frivolous.
The judge stated nevertheless, that the lawyer held a policy from the company in which it had warranted that the cigars were insurable and also guaranteed that it would insure them against fire, without defining what is considered to be "unacceptable fire," and was obligated to pay the claim.
Rather than endure lengthy and costly appeal process, the insurance company accepted the ruling and paid $15,000.00 to the lawyer for his loss of the rare cigars lost in the "fires."
But... After the lawyer cashed the check, the insurance company had him arrested on 24 counts of ARSON!
With his own insurance claim and testimony from the previous case used against him, the lawyer was convicted of intentionally burning his insured property and was sentenced to 24 months in jail and a $24,000.00 fine.
Written by : Matt Davis
Sun, 20 July 2008
Insurance policy confusion
Insurance law experts have called on insurers to address the confusion surrounding the definition of permanent disability in insurance policies...
.
TurksLegal financial services partner Alph Edwards said unclear language at critical places in insurance policies means it is harder for insurers and trustees to administer them, resulting in unnecessary costs to consumers.
Currently, the wording in many life insurance and superannuation policies with cover for total and permanent disability (TPD) is causing lack of consistency and uncertainty for all involved courts, insurers and consumers, he said.
Insurers and super trustees need to clarify this immediately.
According to Edwards, the latest NSW Supreme Court decision (Mabbett v Watson Wyatt Superannuation & Anor) highlighted the need to address the issue.
While the court confirmed that the correct date for assessing the likelihood of an applicants future return to work is six months after leaving a job due to injury, a previous judgement suggested the correct date was when the insurer came to assess the claim.
Heres a case where the judgement is totally at odds with another judges decision on essentially the same thing Its not the judges fault. Its a fundamental lack of clarity in what they are being asked to interpret, Edwards said.
This decision throws out a challenge for life insurers and super trustees to think about the words they use in their group life policies and make the necessary changes to make it absolutely crystal clear how you go about assessing TPD, including this time issue.
Edwards said this was just one of several traps inherent in the definitions and that needed urgent attention.
SOURCE: Justin Lim - Money Management
Sat, 26 July 2008
Who wants to be a millionaire?
Australia now has more of them than Brazil or Spain. John Collett looks at the reasons why.Thanks to the resources boom, the ranks of Australia's millionaires swelled more quickly last year than in most other developed countries...
.
The number of Australians with financial assets of at least $US1 million ($1.03 million), excluding the family home but including superannuation, rose 7.1 per cent to 172,000, according to a survey by Merrill Lynch and Capgemini.
Of the 71 countries surveyed, Australia ranked 10th by number of millionaires.
Australia has more millionaires than Brazil and Spain, despite those countries having much bigger populations. As expected, the US is still the richest country and is home to 3 million of the world's 10 million millionaires.
Yet the large emerging economies of China, India, Russia and Brazil are growing their ranks of millionaires much more quickly than countries with fully developed economies. China, which had 415,000 millionaires last year, is on the verge of overtaking Britain and its 495,000 millionaires.
However, the credit crunch and turmoil in world financial markets slowed the millionaire club's growth rate last year and is expected to affect this year as well.
Wealth in Australia has been generated in several ways, says Thomas Alexy, Merrill Lynch's head of global wealth in Australia. Certainly, the booming demand for commodities has helped, he says.
"But the wealth comes in a lot of shapes and forms."
Apart from the handful of lottery winners, the prerequisite for building wealth is either being successfully self-employed, having a job with a high income or receiving an inheritance.
Yet plenty squander their income without having much to show for it.
Those with discipline who get good advice and take full advantage of Australia's quite generous tax system for borrowing to invest tend to do the best, Alexy says.
He says successful long-term investors are those who preserve their capital with good asset allocation and "never try to hit the big home run".
Andrew Inwood, the founder of brandmanagement, which conducts market research for the financial services industry, estimates that one in four of Australia's millionaires was born overseas.
"Migrants with money used to be mostly from Europe but are now from Asia and even the Middle East and Africa," Inwood says.
He says another striking feature of Australia's millionaires is that about three-quarters own their own small or medium-sized businesses and more than 70 per cent are tertiary educated.
PATIENCE
Doug Turek, the founder of high-end financial planning firm Professional Wealth, says wealth is driven by age, income and a few habits or traits - the main one being patience.
"Barring a few dotcom or iron ore millionaires, it is very hard to accumulate assets quickly; you need time for these things to build. It doesn't necessarily matter if your investment focus is strictly shares or direct property, or a mix of those things or even building a business. The key is having a disciplined focus over a long period of time."
Turek has developed an online survey (www.wealthbenchmarkets.com.au) where people enter their financial details anonymously and in return are told how their wealth compares with others of the same age and income.
More than 90 per cent of the participants in the survey are male. "Males seem to be picking up higher income roles than females," Turek says.
"There is plenty of other research to show that women, because of their time out of the workforce and inequalities in roles and promotion, are not as wealthy as men."
However, Turek says the marked predominance of wealthy males in his online survey may be partly because men are more comfortable than females in sharing their financial information, even though it is given anonymously.
"It is a male-dominated wealthy world," he says.
One of the key determinants of wealth is the family situation. "Being together and not divorced is a very strong success indicator because of the tremendous financial costs of separation over a lifetime," Turek says. "If you have been divorced, your net worth will only grow to three-quarters of those who are not."
PENNY PINCHERS
Inwood, whose company recently conducted a focus group with wealthy people, says some millionaires enjoy an extravagant lifestyle but most are modest in their spending. They tend not to spend that much on clothes and holidays, and are generally "tight" with money but will spend on quality things.
Turek says working overseas is also good for building wealth. "We have found that those that have spent time working overseas have a higher net worth than those who have not.
"You can think of professionals who have worked for a law firm in London or for an investment bank. Then there are those who have grown up in another culture and economy, and have come to Australia as a wealthy migrant."
It is not only those on particularly high incomes that have become wealthy.
Inwood uses a lower threshold for the definition of a high-net-worth individual than many other researchers. His definition is those with assets of more than $450,000 outside of their homes and superannuation. Recent research by brandmanagement shows that about half of them earn less than $100,000 a year.
They are those in their 50s and 60s, the baby boomer generation who have enjoyed rising house prices during the 1990s and 2000s and have good savings and investment habits. Home ownership has given them a springboard to borrow and invest.
Now that house prices are much higher than when the baby boomers first got onto the property ladder, it remains to be seen whether younger generations will fare as well.
SOURCE: John Collett - The Age
Mon, 28 July 2008
7 Cash Flow Steps to a Healthy Budget
The word budget can strike fear into even the strongest of people. If there is one thing very few people are ready for when they leave the safety of home for the first time it is dealing with money. There are not too many people who even know how to balance their chequebook after they open their first chequeing account. So creating a budget can be a scary proposition for anyone who isn't good at keeping track of their money.
But if we look at a budget in a different light then maybe it will be easier to live with what it is. And all it is is a cash flow plan. All a budget does is track where the money is flowing from and where it is flowing to. Cash flow; it's what makes the world go around.
Here are 7 steps you can use to plan your cash flow and before you know it you'll have built a budget. Start with a piece of paper and a pencil; you can save those fancy budgeting software packages for later.
1. Write down your monthly income. If you are a salaried worker this should be easy. If your income is not that steady then add up the past three months worth of income and average it by dividing by three. This will give you a good starting point.
2. Start writing down all your monthly expenses. Mortgage, rent, car payment, credit card payments, utilities, groceries, eating out, entertainment, and anything else you spend money on. For those expenses that fluctuate, such as groceries and gas, use the three month average method to get an accurate amount.
3. Here's the scary part for most people. Subtract the expenses from the income and see what's left. You will either have a positive cash flow or negative cash flow. Unfortunately in this day of increasing debt most people have a negative cash flow.
4. Once you have your monthly cash flow laid out in front of you you can start assigning your money to your expenses. As you make those payments throughout the month write them down to see how your spending lines up with what you have budgeted for that particular item.
5. If you have a negative cash flow then you can start looking at everything you have written down and find areas where your spending may not be in the best interest of you financial goals. As you do this you can free up money for more important financial considerations.
6. The first time you do a cash flow plan it probably won't work out quite right. It normally takes about three months to get everything working right while you figure out where your money has been going every month. Be patient with your budget and before long it will start working and you will regain control of your money.
7. Once you are comfortable with your written budget and you have better control of where your money goes and what it does then consider investing in some budget software such as Quicken. It can make your cash flow plan much easier and with the added features like retirement and tax planning it can give you a solid financial future.
By using these 7 cash flow steps you can begin your budget quickly and easily. Only by taking back control of your money can you improve your financial future for you and your family.
Written by:Andrew Bicknell
Tue, 05 August 2008
Choosing A Disability Income Protection Insurance Policy
People often make the mistake of shopping for an individual disability insurance policy the same way they would for a term life, or car insurance policy.
The concept seems simply enough, "If I get disabled, the insurance company should pay me." Therefore many shoppers spend time comparing quotes from different disability insurance carriers, and trying to find the lowest price.
The internet makes this task even easier when a shopper can simply search for disability insurance on Google, and request free quotes from the top ten search results.
According to statistics, 66% of the people who buy a disability insurance policy in this way will never have a problem because 66% will never become disabled for 90 days or longer before they retire.
However, 33% will become disabled before they reach the age of 65, and therefore will need to understand how the individual disability insurance policy purchased will work.
Buyer beware, not all disability insurance policies work the same way. In fact, no two policies are the same at all.
Definition of Total Disability
The first thing you need to compare is the definition of total disability. This will dictate exactly what the insurance company will pay out a total disability claim for.
While many carriers have slight variations on this definition, there are essentially three major definitions in use in the market today.
The most comprehensive is a Pure Own-Occupation definition of total disability. This definition will result in you being paid the total monthly benefit if a sickness or injury prevents you from being able to perform the material and substantial duties of your regular occupation, even if you are engaged in some other capacity.
The middle definition is a modified own-occupation or income replacement definition. The definition will begin the same way as a pure own-occupation definition does, except for the last sentence which will say so long as you are not engaged in any other occupation. This means the policy will pay you so long as you are not earning any earned income while on a claim.
The third major, and least comprehensive, is the gainful occupation definition which starts the same way as the previous two, however adds the language are unable to perform any occupation for which you are qualified by education, training, or experience. This means the insurance company could say that while you can not work in your current occupation they believe you could do something else, and therefore not pay your benefits.
As you can see, the three definitions are very different, and depending on your income and occupation, the price could be different as a result.
Residual or Partial Benefits
There are so many variations to residual or partial benefits that I could not possibly cover them all in this article.
If you take anything away from this article, make sure you understand when and how the residual or partial disability benefits pay in your individual disability insurance policy.
There are policies out there that allow professionals an unlimited recovery benefit as part of their residual benefits. This means that any fee for service professional would be paid under their residual disability rider for the entire benefit period until they financially recovered, not just until they physically recovered.
There are also policies that just pay a straight forward percentage of the monthly benefit depending on your percentage loss of income, and policies that pay a limited partial benefit.
The scope of benefits is extremely large, so make sure you understand the differences before selecting a policy on your own.
Inflation Protection
My feelings on inflation protection are mixed. It is something you always want to have if you are on an extended long term disability insurance claim, however if you only have a short term claim it is not going to help you.
If you are younger, I recommend purchasing this option every time because there is a longer period of time that inflation could affect your benefit amount while on claim.
If you are older, feel free to make your own decision. You can always buy it now, and drop it later on in life when inflation is not much of a threat to you.
I hope some of these tips help you make an educated decision when purchasing your own individual disability insurance policy.
It is not a contract where browsing by price will give you the best deal, it will only mean you bought the cheapest disability insurance policy out there.
Written by:Steven Crawford
Tue, 05 August 2008
Choosing A Disability Income Protection Insurance Policy
People often make the mistake of shopping for an individual disability insurance policy the same way they would for a term life, or car insurance policy.
The concept seems simply enough, "If I get disabled, the insurance company should pay me." Therefore many shoppers spend time comparing quotes from different disability insurance carriers, and trying to find the lowest price.
The internet makes this task even easier when a shopper can simply search for disability insurance on Google, and request free quotes from the top ten search results.
According to statistics, 66% of the people who buy a disability insurance policy in this way will never have a problem because 66% will never become disabled for 90 days or longer before they retire.
However, 33% will become disabled before they reach the age of 65, and therefore will need to understand how the individual disability insurance policy purchased will work.
Buyer beware, not all disability insurance policies work the same way. In fact, no two policies are the same at all.
Definition of Total Disability
The first thing you need to compare is the definition of total disability. This will dictate exactly what the insurance company will pay out a total disability claim for.
While many carriers have slight variations on this definition, there are essentially three major definitions in use in the market today.
The most comprehensive is a Pure Own-Occupation definition of total disability. This definition will result in you being paid the total monthly benefit if a sickness or injury prevents you from being able to perform the material and substantial duties of your regular occupation, even if you are engaged in some other capacity.
The middle definition is a modified own-occupation or income replacement definition. The definition will begin the same way as a pure own-occupation definition does, except for the last sentence which will say so long as you are not engaged in any other occupation. This means the policy will pay you so long as you are not earning any earned income while on a claim.
The third major, and least comprehensive, is the gainful occupation definition which starts the same way as the previous two, however adds the language are unable to perform any occupation for which you are qualified by education, training, or experience. This means the insurance company could say that while you can not work in your current occupation they believe you could do something else, and therefore not pay your benefits.
As you can see, the three definitions are very different, and depending on your income and occupation, the price could be different as a result.
Residual or Partial Benefits
There are so many variations to residual or partial benefits that I could not possibly cover them all in this article.
If you take anything away from this article, make sure you understand when and how the residual or partial disability benefits pay in your individual disability insurance policy.
There are policies out there that allow professionals an unlimited recovery benefit as part of their residual benefits. This means that any fee for service professional would be paid under their residual disability rider for the entire benefit period until they financially recovered, not just until they physically recovered.
There are also policies that just pay a straight forward percentage of the monthly benefit depending on your percentage loss of income, and policies that pay a limited partial benefit.
The scope of benefits is extremely large, so make sure you understand the differences before selecting a policy on your own.
Inflation Protection
My feelings on inflation protection are mixed. It is something you always want to have if you are on an extended long term disability insurance claim, however if you only have a short term claim it is not going to help you.
If you are younger, I recommend purchasing this option every time because there is a longer period of time that inflation could affect your benefit amount while on claim.
If you are older, feel free to make your own decision. You can always buy it now, and drop it later on in life when inflation is not much of a threat to you.
I hope some of these tips help you make an educated decision when purchasing your own individual disability insurance policy.
It is not a contract where browsing by price will give you the best deal, it will only mean you bought the cheapest disability insurance policy out there.
Written by:Steven Crawford
Mon, 18 August 2008
Which Credit Card is Right for You
If you're in the market for a new credit card, there is a bewildering array of cards to choose from. There are even more incentive offers, so how can you decide on the card that is best for you? Here are some of the factors to consider.
What Kind Of Payer Are You?
The most crucial question is whether you are a person who clears the credit card every month or whether you always leave a balance on the credit card.
If you pay up at the end of every month, then you can go for a credit card that offers an incentive. If not, then you need to look at the annual percentage rate (APR) on the card. If you know what your typical credit card balance is, look at the illustrations given by card issuers to give a guide to how much you might have to repay over time.
Taking An Interest
Even with interest rates, you need to be careful. Although your new credit card may come with a 0% balance transfer rate, this is not the only rate to think about. Look at the rate on purchases or other transactions to see what you might be paying. And remember that any payments you make are likely to pay off the transferred balance first, while any new spending accrues interest.
Compare Credit Cards
Want to know which card is right for you? Why not check out our credit card comparison page to view a table comparing features and benefits of some of the most popular cards. Click here.
Hand in hand with the interest rate goes the interest-free period. This is the delay between spending money on the credit card and being charged interest. This can vary considerably depending on the card you choose. The interest free period can be as much as 56 days. And it's how you use it that counts. If you put major spending on the credit card after the statement date, you have a month till the next statement, and then a few weeks to make the payment. This can be a good way of managing cash flow.
Look At The Fees
There are three types of fees that count with credit cards. The first is the cash withdrawal fee. Many credit card issuers charge you for withdrawing cash at an ATM. These fees can be around 2% of the transaction. The percentage is even higher when withdrawing cash abroad. If you must use the credit card, then you're better off making one large withdrawal so you don't pay the minimum fee each time.
Getting Some Cash Back
Some credit cards offer annual cashback deals which are great for people who clear their balance every month, but not so good for others. If you don't clear your balance, the interest charged will wipe out any cashback gains. There are also reward points schemes that allow cardholders to earn money from their spending and spend it again with a variety of high street and online retailers.
Paying attention to these items will help you to choose a credit card that will match your financial situation.
Source:Amanda Cherry
Sat, 23 August 2008
How much is your life worth?
By Sarah Mills, ninemsn Money
Putting a number on your life can be a bit disconcerting, possibly even disappointing. The thought of mortality can be sobering and many people avoid the issue altogether. However, we are all going to die and it is common sense to address the topic of life insurance sooner rather than later.
By your mid-30s the chance of contracting a degenerative disease starts to rise sharply. Degenerative diseases include cancer, heart attack, diabetes, arthritis, Parkinson's, Alzheimer's and multiple sclerosis, to name just a few. Any of these can cause debilitation or death, as can an accident.
How much should I insure for?
Deciding on a life insurance payout can be tricky. Some might consider themselves priceless but insurance companies prefer to deal in specifics and they do have limits.
Generally, the higher the lump-sum payout, the higher the premium to a large extent insurance companies leave it to the individual and market forces to arrive at a figure.
A $1 million term insurance policy, for example, will normally cost a healthy person in their late thirties about $70 a month or $840 a year. Many insurers put an upper limit of about $2 million on an average life. If you wish to insure for more than this, you may have to take out separate policies with different companies.
When calculating the amount of life insurance you want, the first step is to calculate your cost of living mortgages, bills, food, rent, debt, clothing, transport and so on. This will help you determine how much money you will need to survive if you are unable to work because of a life-threatening condition or how much money your family will need to survive in the event of your death.
One quick method to estimate life insurance is to calculate your gross annual income and times it by 20 years. An average gross weekly family income of $1324 translates to about $70,000 a year or $1.4 million over 20 years.
However, insurance is needs based and the amount you insure for should primarily reflect your stage in the life cycle.
Single people
A single person with no dependants does not have a great need for life insurance. Any policy would only really need to cover net debts and funeral costs. Average personal debt outside home loans includes HECS debt, credit card debt, car loans and personal loans and averages $14,400.
Married couples
For those married with a mortgage, the stakes rise. If one partner dies, the capacity of the remaining partner to repay the mortgage is severely compromised. This is exacerbated by the fact the economies of scale on the cost of living available to couples are withdrawn. Any insurance would need to cover mortgage repayments, other debts and funeral costs, with something left over as a cushion to fund the grieving period.
Couples with children
Life insurance is critical for people with children. According to ABS statistics, 4400 parents die each year. While this is only a small percentage of the 2.7 million families in Australia, if you or your partner prove to be one of the 4400, that is little consolation.
A report by AMP and the National Centre for Social and Economic Modelling shows an average family is likely to spend about $448,000 in today's dollars to raise two children from birth to age 20. Another report in The Bulletin in 2005 estimated that the cost of raising a child to age 18 for a typical higher income family was just over $500,000.
It would be safe to assume then that the parents of a two-child family would need to be insured for at least $1 million. This would cover mortgage repayments, education, food, clothing and other expenses over the life of the child. Inflation also needs to be incorporated into the calculations. Those with businesses also need to calculate business debts and assets.
These figures assume a speedy death. For those suffering loss of income arising from a health problem, medical costs also need to be factored into the equation.
Life insurers offer a number of packages to meet the life stages of different individuals and they usually offer a lump sum or pension in the event of death, total and permanent disablement, accident and trauma. Working from an average figure like this, you will need to determine how much you are prepared to insure yourself for. If a family can't afford to insure both parents, the primary wage earner should be insured.
Types of insurance
How much you insure your life for will depend very much on the type of policy you take. Offerings usually fall under the following categories:
Term insurance
Whole-of-life insurance
Income protection insurance
Accident insurance
Mortgage insurance
Business overheads and insurance
Trauma insurance
Policies that mature and return a lump sum or a pension after a certain period are more expensive and have an investment component. They can be regarded not only as insurance but as savings.
Premiums
Your premiums will be set according to your risk rating. Insurers have four general risk categories:
Preferred
Standard
Substandard (this normally refers to those with a high-risk job or hobby)
Uninsurable (those with a terminal illness)
Beneficiaries
Insurance companies will issue a beneficiary form to new policyholders, asking them to nominate the payee. It is essential that this is completed, otherwise the lump-sum payout can get held up in the estate sometimes for years, depending on how quickly a will is processed.
It means the proceeds will go directly to your nominated beneficiary as soon as the claim has been processed. This means your loved ones will have access to sorely needed funds in the shortest possible time. Under law, the person nominated on the insurance beneficiary form takes precedence over the benefactors of a will.
Joint or single insurance
Most couples have the option of taking out joint or single insurance. Joint life policies are cheaper but they usually pay out on the death of the first policy holder, leaving the second person uninsured at an age when the premiums shoot up in price. However, so long as all obligations have been met by the first payout, this may be worth it.
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