Most of us would rather avoid thinking about what would happen if we were unable to work again due to a total and permanent disability or injury. Jane’s story is a powerful reminder of the value of having Total and Permanent Disability (TPD) insurance in place should you find yourself in this unlucky situation.
The former Office Works employee was on her way to work one day when she stopped to help someone broken down on the side of the road and was caught up in a secondary accident. Her injuries were life-threatening and severe, and it was two years before she was able to walk again. Because of the accident, Jane had to accept the harsh reality that she is no longer able to work again.
Thankfully, she had some TPD cover in her super and was able to claim a lump sum. She had also received a payout from her Compulsory Third Party (CTP) insurance. Jane needed a strategy to maximise her savings and provide her with an income for the future and came to us for some advice.
A key part of our strategy to leverage Jane’s payout involved minimising her tax liability through a personal injury contribution to super. If a super contribution arises from a personal injury payment or structured settlement, you may be able to exclude it from your non-concessional contributions cap. That means no extra tax will apply to that contribution, provided you meet certain conditions. Jane’s circumstances made her eligible for this exemption.
Jane was delighted to learn that this structure would provide her with a tax-free income stream to fund her cost of living in retirement. The plan included sufficient funds to undertake a small renovation and purchase a caravan, enabling her and her husband to travel around Australia.
It is rewarding to help clients like Jane through extremely challenging and life-changing events and to create a path for their future. Jane was so happy with our advice that she sent her husband, Mark, to meet with us to make his own retirement plan. Most importantly for us, the couple has transitioned into a new chapter in their lives, secure in the knowledge that their financial needs are well-managed.
TPD insurance pays a lump sum if you become totally and permanently disabled because of illness or injury. Each insurer has a different definition of what it means to be totally and permanently disabled. When investing in TPD insurance, consider your financial needs in the event of an unexpected occurrence. Commonly, these include living expenses for you and your family, debts, medical and rehabilitation costs and savings for retirement. If you need assistance, please don't hesitate to contact us.
General Advice Warning: The information provided in this article is general in nature and does not consider your particular investment objectives, financial situation, or insurance needs; we therefore recommend you seek advice tailored to your individual circumstances before making any specific decisions.
Dobbrick Financial Services (Gympie) Pty Ltd ABN 48 931 205 109 and Dobbrick Financial Services (Ipswich) ABN 86 100 184 521 & DFS Oakland ABN 64 340 527 395 and their advisers are authorised representatives of Fortnum Private Wealth Ltd ABN 54 139 889 535 AFSL 357306.
