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When life’s small decisions become big ones
01 April 2013 Posted by 

When life’s small decisions become big ones

 By Ben Donald

AT the start of each year since leaving university, I have made a habit of sitting down over a week or two and setting, rewording and reviewing goals for the next few weeks, months or years.

The focus used to be all sport, travel and finances but since marrying 12 months ago this has started to change to include family.

One particular life stage my wife and I have started thinking about is children and what it means for us to start a family. This is obviously a huge step that a lot of folks go through, so every topic under the sun has been raised by us and well meaning (nosy) parent- in-laws.

While we can agree that any daughters will play netball, my sons will be playing rugby, not swanning around on an Aussie Rules oval as my wife would prefer (pun intended).

The financial planner in me started becoming concerned about money and saw that it was quite necessary to do a bit of homework on what parental leave  was available to us and also if we had the right income protection policy in place.

Parental leave When starting to plan a family it was immediately clear that any sort of income we can earn whilst caring for our child full time, was vitally important.

We both earn about the same so missing out on half our combined income is a serious issue. For someone who doesn’t pay much attention to the news, it seems to me that with this huge Federal election campaign maternity leave is mentioned quite often in the news.

After spending a couple of minutes on Google it was clear my first impressions were correct. There is paid and unpaid parental leave, dad and partner pay, baby bonus, family tax benefit A & B, and benefits provided by employers; in short a lot to consider. For parental leave the Government sets a minimum standard of benefit for eligible employees. 

As at the time of writing this is 18 weeks at the full time minimum wage of $606.40 per week. There are a number of options available to new parents and the best place to start is the Department of Human Services website humanservices.gov.au which has a few videos and comparators available.

Income protection Over recent years insurers have become very competitive and to the benefit of the consumer they often compete on premiums and on definitions.

Just like life insurance with a 12 or 13 month suicide exclusion, generally income protection policies (IP) will have some sort of pregnancy exclusion built in to the contract. Unlike the life insurance, the difference in exclusion between the insurers is substantial.

If you are thinking about starting a family it is so important to do your due diligence (and make sure your adviser has done theirs) and get this right. I recently implemented an IP contract for a mother of three who on the birth of her youngest had severe back trouble for 18 months, leaving her unable to work for more than a few hours a day.

Her children have since attended school and everything is fine, however the story she outlined was one of financial stress and resultant personal strain between her and her husband during that time. The list of approved insurers I advise on includes the biggest and most well known insurers in Australia.

The selection of insurer is vitally important as this situation could have resulted in three outcomes:

1) No benefits being paid;

2) Benefits commencing three months after birth or;

3) Benefits immediately after birth.

More specifically, the difference between insurers largely relies on the definitions of “uncomplicated pregnancy”, and “complicated pregnancy”, If benefits commence during the pregnancy or after the birth, and the length of the waiting period. Insurance is all about peace of mind and surety at time of claim.

As advisers we aim to do the work behind the scenes so that our recommendation can be the best possible for you. I have watched a few friends and both my sisters go through nine months of pregnancy and the impact on both them and their partners.

One thing that’s readily apparent especially with a first born is the nerves and uncertainty that came to the fore. My wife isn’t pregnant but she is already asking me “what if” questions after each episode of the documentary series ‘One born every minute’.

I have already promised that she can continue squeezing my hand after I faint. When it comes to starting a family we have our own fears and uncertainties. It may not seem like much, but one uncertainty neither my wife nor I have to consider is the financial impact resulting from some of those “what if” questions.

With the above stories in mind it is vitally important for everyone to consider their particular circumstances and see how any ‘down time’ in their employment would affect them if they were unable to work because of sickness or injury.

With the large variety of personal insurance covers available, it is difficult to make an informed decision on what may be best for you, so seeking professional advice from a financial adviser, account and/or solicitor should be part of your considerations of what cover may be best for you, particularly when it comes to protecting your hard earned income.

Disclaimer: Ben Donald is an adviser with Austbrokers Financial Solutions (SYD) Pty Ltd, and is an Authorised Representative of Millennium3 Financial Services Pty Ltd. Austbrokers Financial Solutions (SYD) Pty Ltd is a Corporate Authorised Representative of Millennium3 Financial Services Pty Ltd, Corporate Authorised Representative No: 415837.   Millennium3 Financial Services Pty Ltd, ABN 61 094 529 987, holds Australian Financial Services Licence no 244252. The information is this article is general in nature and does not constitute financial advice.



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