Author Topic: Early Retirement Australia  (Read 4376 times)

bigchrisb

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Re: Early Retirement Australia
« Reply #50 on: August 29, 2018, 05:18:09 AM »
I always took the approach that it was financially better to self insure, so didn't hold life, income or trauma/tpd insurance. I still maintain that if you have no dependants and positive net worth that life insurance is a waste.

However, my mind changed about trauma, tpd and income protection while in the accumulation phase - and now believe that it's more important for us than the average punter - as it's a fairly short career in accumulation you need to insure.

Of course, my opinion is biased, as I ended up with a condition that meets trauma insurance. I was super lucky - as part of the business sale I was able to take over a trauma policy that used to be key person insurance. After about 6 months back and forward with the underwriter, it paid out about 600k, at a point where I was already fi. It changed dealing with the condition from manageable to very comfortable.

It's expensive, but I'd now recommend it.

kiwiozearlyretirement

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Re: Early Retirement Australia
« Reply #51 on: August 30, 2018, 09:08:29 AM »
I agree with bigchrisB when you are accumulating, that loss of income would make a big difference and it's not like you are insuring  it for a 40 year career if you plan to retire early. However, the premiums are so high especially if you are insuring a high income. I have a colleague who pays $12000 a year to insure 80% of their salary. Another colleague calculated by the time he was over 60 he had spent the equivalent of 1 million dollars on insurance.
Every year my premium seems to increase by $500 and every year I find ways to cut it. For example I have so much sick leave accumulated I pushed the start date out to 90 days. Also I only insured up to age 55 as I should be retired by then anyhow. They keep indexing the amounts with inflation to go up by 5% so I cut that back to a fixed amount the family needs to be financially independent if I die. Which thankfully decreases every year as our nest egg grows.
But I had to cut the amount insured so dropped it down to just over the annual expenses so we will not have to draw on our investments to supplement our lifestyle. Of course you must anticipate that expenses will go up if you are incapacitated. But then sadly you probably won't be spending large on travel and sports so it may even out. At least income protection is tax deductible. You guys are a savvy lot so maybe there is room for more optimising. I am paying $2260 annually to insure 78000 annual income. 90 day waiting, insured till 55. Female professional age 45 with no health issues, non smoking. Has anyone found a deal cheaper than that? You can often find something cheaper with the starting discount but then it reverts and I'm not sure I can be bothered changing. Does anyone have a regular policy with a company they trust for less than that?

itchyfeet

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Re: Early Retirement Australia
« Reply #52 on: August 30, 2018, 12:35:54 PM »
I find all this quite interesting as someone who has rolled the dice without insurance.

I remember when we took on our monster mortgage to buy a place in Sydneys inner west and at that time I toyed with getting income protection, but the premiums were so high. In the end I decided that Id just sell if I ever lost my job and cop the loss, if that was how it turned out. DW was in a govt job so I thought it improbable wed both be unemployed at the same time.

But, I know now that I am older and wiser, that bad shit does happen. Probably if I had my time again Id properly assess the risk rather than just dismiss it. I know we got lucky.

bigchrisb

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Re: Early Retirement Australia
« Reply #53 on: August 30, 2018, 12:58:12 PM »
If I were being brutal in optimising, I'd probably skip the income protection insurance - you don't need a salary from 25 to 55 if you are only accumulating for 10 years.  Likewise, I'd run the risk on becoming unemployed - finding a new job is in your control.  However, I would take out trauma or tpd insurance to guard against disability or serious illness for the amount missing from your stash, then lower the policy amount as the stash got closer to target.  That means you have the biggest policy when you are youngest and with the lowest premiums, and tapering down as you get older.

When the policy was first taken out, I was about 30, and 500k of life, tpd and trauma was around a grand a year if you had no pre existing or hereditary issues.

Grogounet

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Re: Early Retirement Australia
« Reply #54 on: August 30, 2018, 10:29:07 PM »
the only thing that i have done in your list that you have not is that i went with an insurance broker. i could no beat him on price. i have got to $1 300 this year for income protection and was $1 000 last year. and my salary is above yours i have asked 75% coverage. might be worth exploring

kiwiozearlyretirement

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Re: Early Retirement Australia
« Reply #55 on: September 06, 2018, 03:23:51 AM »
the only thing that i have done in your list that you have not is that i went with an insurance broker. i could no beat him on price. i have got to $1 300 this year for income protection and was $1 000 last year. and my salary is above yours i have asked 75% coverage. might be worth exploring

Hi Grogunet,

Do you think your policy is own occupation? i.e. if you can't do your job due to a head injury they might get you a road working job operating a stop go sign (no offence to road workers). Who was the insurance broker? I have looked through I select and compare the market. Was $1000 your first year and now it is $1300. They often have a high discount for the first year and then count on you not changing again. Who is the company you are insured with?

Grogounet

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Re: Early Retirement Australia
« Reply #56 on: September 09, 2018, 04:45:46 AM »
Hi there Kikiwozearlyretirement,
You are correct, your occupation does play. and the more "risk" is perceived the more you'll pay.
For my job, the stress factor, which can cause heart disease and so on was the "risk".
I'm with Onepath.
More than happy to give you the details of my broker, PM me, I'm not affiliated to him but finds him good to get me a better price I can get otherwise !
Cheers