Tandem Financial

Tandem Financial We help people who are great at their careers - and ready to be great with their money too.

Our clients are professionals in their 30s to 50s who want someone to help close the gap between where they are and where they could be.

04/04/2022

Budget 2022 – Changes you need to know

Budget night 2022 came and went on the 29th of March 2022.

Being an election year, there could be another budget announcement if there is a change in government later this year.

But what are some of the proposed changes that were announced, and which ones affect you?

Taxation
- Cost of living tax offset – this offset is worth $420 for low to middle income earners (up to $126,000) and combined with the existing LMITO (low to middle income tax offset) of $1,080, eligible singles will get a tax break of $1,500 and couples $3,000.
- Halving of the fuel excise – this aims to reduce the cost of fuelling up your vehicle by about 22c/L for a 6 month period to help reduce the costs of living to the average household.

Home ownership
To help with the the cost of home ownership, the government will be providing guarantees to help eligible individuals get into the property market with a deposit of 2-5%. The main groups to benefit are:
1. First home owners
2. Those who haven’t owned a property for 5 years and relocating to regional areas
3. Single parents

Superannuation
No significant changes beyond the continuation of the reduced minimum pension drawdown amounts.

Small business
- Training deductions – ability to deduct 120% of eligible staff training costs
- Technology deductions – ability to deduct 120% of eligible business costs supporting the adoption of digital technologies
- Changes to PAYG instalments to ease cashflow pressures on small businesses

For more detailed information, please download our budget summary

https://tandemfinancial.com.au/budget-2022-changes-you-need-to-know/

29/03/2022

Your Cost for Personal Income Protection Insurance is Increasing: Here’s Why

It’s no secret that the cost of personal income protection insurance is on the rise. In one instance, our client’s premiums increased by 78%! While this news may not be welcomed by policyholders, there are a few reasons why rates are going up. In this blog post, we will explore some of those reasons and help you understand why your cost for personal income protection insurance is increasing.

What is income protection?

Income protection insurance is a type of insurance that replaces your lost earnings if you are unable to work due to an injury or illness. The benefit is paid as a monthly income, which can help you cover your mortgage repayments, bills and everyday living expenses.

Why have rates increased?

There are two main reasons why the cost of income protection insurance is on the rise

Insurance companies losing too much money on income protection claims

In Australia, life insurance companies lost about $3.4bn from 2014-2019. The regulators had to step in to stabilise the industry by making income protection policies sustainable in the long run. In fact, the policies available today, are significantly different to those that you could get only 2-3 years ago. The new policies pay out a smaller percentage of income and are designed so that there is less chance of long term claims. This means the policies of days gone by have no supply, giving insurance companies the ability to control the pricing to ensure they can afford to pay at claim time, or possibly to push consumers towards their newer, more sustainable products.

Record low interest rate environment

Insurance companies in Australia are required to maintain an adequate cash reserve to ensure they can pay claims when they fall due. One way to grow this cash reserve is by investing in term deposits and other interest-bearing products. However, with interest rates at record lows (0.10% as of writing), returns on these investments have been significantly lower than years past, putting pressure on income protection premiums to make up the difference to drive profitability.

What are your options?
One option is to consider what policies are available to you today. Keep in mind that if you have had your policy prior to October 2021, the definitions are likely to be much better than what is available today.

Another option is to bite the bullet and keep your existing policy and pay the higher price. However, if this is not affordable for you, you can consider making some adjustments to your existing policy:

- Increase the waiting period. The waiting period is the amount of time you must be unable to work before your policy pays out.
- Reduce the benefit period. The benefit period is the length of time that you will receive income payments from your policy.
- Decrease the sum insured. The sum insured is the maximum amount that your policy will pay out per month.
- Change the type of premium. There are two types of premiums for income protection insurance – stepped and level. A stepped premium starts out lower but increases each year as you age, while a level premium increases at a much lower rate.
While it may not be ideal, these are all options to help make your premiums more affordable in the current climate.

If you need further advice, feel free to contact Tandem Financial on 1300 892 585 or click here to book in a meeting with our adviser.

Address

Suite 121/Mezzanine, 32 York Street
Sydney, NSW
2000

Opening Hours

Monday 9:30am - 5:30am
Tuesday 9:30am - 5:30am
Wednesday 9:30am - 5:30am
Thursday 9:30am - 5:30am
Friday 9:30am - 5:30am

Telephone

+611300892585

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