Can we do better than the bank’s insurance?

Yes we can. In fact we might save them plenty say 3,672  & with a better plan.


How much total saving is that over the 25 years of the mortgage?

But there is more. What if it doesn't come from 'William's' cashflow?

On the 12^th October  ‘William’ went online requesting if we could do better than the bank which had offered mortgage protection on their new loan.

When you have a new mortgage of $591,000 & as always happens with a bank then yes cover is essential. The bank said they had a cooling of period of 21 days & hence some urgency from the bank.

As ‘Margaret’ had a accident a few years ago & it had cost them an out of pocket $100,000 in medical expenses they were very aware of the need for cover.

The bank as they do ‘offered’ them mortgage protection on each  for the debt of 591,000 & for the monthly  repayments of 3865p.m. for up to 5 years.

It also has in the interim policy schedule that the  

‘Policy Period               5 years (60 months) from the policy commencement date.  Renewal may be offered at the end of the 5 year period.’

The total premium is 820.96p.m.

That is a lot from their cashflow & all it does is look after the bank. It cover the debt & the monthly repayments only.

Fair enough & as we were aware of Margaret’s ongoing health challenges we weren’t going to challenge that when cover is needed by both.

If a disability does occur then how do they meet the other living expenses  such as meals, rates petrol,… as they have cover only for the monthly  payments.  These are the payments for 25 years. 

What if they want to accelerate the debt reduction.?

What happens at the end of 5 years if the bank doesn’t offer to continue with the cover?

The loan would hopefully be reduced but it will still be sizeable.

 They still will need the cover & as they will be 5 years older they are even more likely to need it.

 Maybe they won’t be able to buy other cover when they want it as they could be uninsurable.

When it comes to claim time then the real story comes out.

We are aware that the bank application form has few questions on application but a lot more on claim time.

We have listened to an insurer recently who does insurance directly with a few questions & through advisers who ask you 60+ questions.

The insurer stated that with direct insurance that not only do you pay more but on average 45% of claims are declined. 

Now you want to minimise that risk because at claim time it is too late.

With insurance through advisers then the claims declined is a lot lower which is what you would want.

We have just looked at one company each to ‘compare the two’

William’s premium is 267 p.m. i.e. a saving of 162 p.m. or 1944p.a.

Margaret’s through a different company is 256p.m. i.e. a savings of 173p.m. or 2,076p.a.

i.e. subject to underwriting an annual total premium 6,276

the bank mortgage protection  with a discount is 9,948p.a.

i.e. ideally we might save William & Margaret 3,672p.a.

Yes there are differences in premiums in that we guess that the banks premium is the same for 5 years whereas the insurers go up each year.

·         the bank also offers ‘Involuntary employment benefit’  does not cover ceasing work after contract ends·         our comment is that is usually at most 3 months & is just ‘cheese in the trap’.

Remember the insurance policies we action are non cancellable by the company.

Now we have only started our research. 

We are not aligned & we were instructed by William & Margaret so we work for them. We will research more closely the up to 17  companies that we might use.



The savings might be greater as how is this need to be paid for?

Suppose there is a better way for at least some of the premium to be paid from elsewhere.

If William wants us to give advice then we need & are required to 'know the client'.

 Blake asked for a quote recently which doesn't solve his problem as funding it is always  the challenge.

Of course we will wait until Margaret gets her cover & accepts any offer before we start saving the difference.

If you want to ‘compare the two’ or wish for a strategic review then you are welcome to call or email or contact us through our websites. 

Remember

‘if we were in your financial position what would we do so that you are better off financially in three years time’

William did enjoy our cooked breakfast & you too could check out our menu.

William  did comment that he checked us out with his ex colleagues & we passed all their  tests.

We knew that.

He might check up on the banks as they did in the UK.

John  McAuliffe

An invitation to you to meet over lunch.

Let’s remind you what we offer. We offer the opportunity to discuss here over lunch or some other suitable time your personal financial position. Let’s face it, it just might need a financial tune-up & you have wondered where to turn. If the car has a regular tune up & the dentist suggests every 6 months then it also makes sense with your finances.

Yes it is possible that the super fund you are in is the cheapest with the best performance ever but that is only part of your financial challenge. You get what you pay for & you are not paying for advice. 

Then there is always your mortgage & are you paying that first before you pay yourself as that DEBT word is another four letter word. Your mortgage debt should be your first priority. What happens when rates increase or when the employer makes you redundant or when there is one income as family is expected? What happens as we often see that you will retire & your super is required to pay out the mortgage.

Then there is the taxx man. There the super contributions increases from 9% to 12%. Surely that is another taxx as it is your income which you can’t spend or invest. You only need to look at your net or take home pay after all the deductions & mortgage interest to be well aware that it is a struggle to survive. 

We only a fortnight ago explained to a young cop with 2 children that many were like him – they couldn’t afford the fine as they were surviving only to the next pay. We did point out we had no sympathy for the idiot on the road & should be treated as an idiot. A fine is another taxx & yes the state government needs the cash. Why not have the taxx man subsidise your DEBT?

We have recently helped a couple aged 48 with a $340,000 mortgage which means unless they are disciplined they will certainly need his super to pay down his debt. However with our active wealth strategy it is projected to be paid out in 9.4 years & to later retire on 67,000p.a.

We have seen at least two others our age & who should be retired who have said they are willing to work to age 75 because their position means they can’t do otherwise. They will need also our wholestic health story. 

We have seen those with rental property where there was a $9000 dollar p.a. shortfall between income & expenses. That makes living & explaining to the spouse a challenge & a hope that property markets will always go up. 

 We have seen a lady who has 2 million in assets but property & super aren’t very liquid should a major trauma or illness occur. Haven't you heard of those excessive out of pocket medical demands. William said yesterday they cost him 100,000.  yes 100,000.

We saw on Saturday another lady who has just separated & although better than most with own house & useful super it will need care & attention if she is to retire on what she currently earns. 

We have others wanting us to be the ‘go to’ man as a call centre isn’t good enough. 

We could provide numerous other examples & we provide non aligned important insurance & protection options.

 Be very aware that you can lose your house & credit rating if no income.

Every person has their own challenges & as an ex math’s teacher we do like to have a solution to each problem. 

As our 11 year old  is now having a term studying abroad  we have had the opportunity to spring clean the garage. What a difference & so much more space. We all need to spring clean our finances occasionally.

We do have many other ideas as many haven’t considered estate planning or spouses super or looking after the small shareholder in a business. 

Every one needs a non aligned approach which is what we offer.

We as other do have views on SMSF & the responsibilities of trustees.

Of course there is our active wealth strategy which looks at your overall financial position including having the taxx man subsidise your DEBT & helps you to achieve your goals. We provide 24 / 6 support for your benefit.

Welcome to email or book via our websites www.JohnMcAuliffe.com.au

& www.wealthcoach.net.au  or www.wecoachwealth.com  

or call on 07 3848 1088 for that opportunity to discuss & financially progress.

 After 29 years in financial services we care if you care enough to call or email us.

John McAuliffe