It’s no secret that not enough Australians hold life insurance, and recent research demonstrates that most are underinsured.

In 2013, Under-Insurance was prevalent when research from life insurance provider TAL found only 30%-37% of Australians aged 18-69 held life insurance. Only 11-18% held disability cover, income protection insurance, or critical illness and trauma cover.


    a) Provides a regular monthly benefit in the event that you are unable to earn an income as a result of prolonged sickness or disability.
    a) Provides a lump sum in the event of suffering from a specified critical illness or injury. Common events are Cancer, Stroke, Heart Attack or Major Head Injuries.
    a) Provides a lump sum from which debts can be met and/or an income stream created for surviving family dependents.
    a) Provides a lump sum payment if you are totally and permanently disabled and are unable to work again as a result. This lump sum can be used to meet debts and/or provide an income stream for surviving dependents.

We can assist you to structure a suitable insurance strategy to protect yourself and your financial dependents.

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These policies provide income due to your inability to work as a result of a sickness or injury/accident. They pay a regular income stream either fortnightly or monthly, depending on the policy provisions.

Your MOST VALUABLE ASSET is your ability to earn an INCOME

Lose your ability to EARN and you may lose EVERYTHING

Without INCOME PROTECTION, what are your options?

  • Employer:
    Do you have sufficient Sick Leave, Holidays, and Long Service to last to the age of 65?
  • Savings:
    Do you have sufficient saved to provide you Income for 1 year, 5 Years or to age 65.
    How long did it take you to save that money, can you save those funds again and still meet your Retirement Needs and living expenses.
  • Borrowings:
    Will a bank lend you money when you have no Income?
  • Charity:
    How long can you rely on charity, family savings or philanthropic goodwill?
  • Asset Sales:
    Do you have liquid assets? Is it a good time to sell? Will you get a fair price?
    Can your Investment Planning take hit like in the topic of Savings?
  • Income Protection Plan
    Premiums are Tax Deductible and cover is affordable if you plan.

5 Policy Features:

  • Life Insured
  • Benefit Amount
  • Policy Owner
  • Waiting Period
  • Benefit Period

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Total and Permanent Disablement (TPD) contracts are normally attached to term life policies and pay a lump sum on the total and permanent disablement of the insured. Total and permanent means 100%. Payments can be denied if it is found that the claimant is not 100% totally and permanently disabled.

If you could not WORK AGAIN how long would you finances LAST?

This is Considered to be the basis for a claim:

  • If unable to work;
  • For loss of limb(s) or sight; and/or
  • If unable to perform basic daily living activities.

Unable To Work
There are two definitions that exist within the “unable to work” criteria of TPD.

These are known as “ANY” and “OWN” occupation.


Due to illness or injury, is incapacitated to the extent YOU will never return to work in any occupation YOU are suited to by education, training or experience.


Due to illness or injury, is incapacitated to the extent YOU will never return to work in your insured occupation.

Areas considered when determining your level of cover:

  • Home Loan – Paid Off.
  • Investment Loans – Paid Off.
  • Living Expenses covered through to retirement.
  • Retirement Income through age 90 or a nominated age determined by you.
  • Potential taxes if placed under ownership other than the insured.
  • Less possible disposable or saleable assets.

      = Total & Permanent Disablement Cover

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Life insurance is a protection against financial loss that would result from the premature death of an insured.

The goal of life insurance is to provide a measure of financial security for your family after you die. So, before purchasing a life insurance policy, consider your financial situation and the standard of living you want to maintain for your family.

Life insurance is designed to provide a source of income or lump sum payment to your family and children.

If you DIED today, how long would your FAMILY SURVIVE financially?

Could you continue to pay life’s ongoing financial obligations, such as:

  • Mortgage, rent and car payments.
  • Everyday living expenses and bills.
  • Funeral and estate-related costs.
  • Education expenses for your children.
  • Holidays, Gifts, Renovations and Upgrades.
  • Remaining partners’ retirement needs.
  • Any outstanding debts.

Areas considered when determining your level of cover:

  • Home Loan – Paid Off.
  • Investment Loans – Paid Off.
  • Living Expenses covered through to retirement for remaining family.
  • Retirement Income through age 90 or a nominated age determined by you.
  • Potential taxes if placed under ownership other than the life insured.
  • Less possible disposable or saleable Assets.

      = Life Insurance Cover

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Trauma is designed to pay a lump sum on the diagnosis of an insured medical condition:

  • Heart Attack
  • Coronary Bypass Surgery
  • Malignant Cancer
  • Stroke
  • Paraplegia/Quadriplegia
  • Chronic Kidney Failure
  • Major Head Trauma
  • Diplegia or Hemiplegia
  • Major Organ Transplant
  • Multiple Sclerosis
  • Severe Burns
  • Brain damage
  • Severe burns
  • Loss of hearing
  • And many more

Note: Events and definitions vary from policy to policy.

Application of Cover

Trauma insurance has application in both business and personal situations. The policy also does not stipulate that the insured be unable to continue to work, as the prerequisite is the diagnosis of the medical event.

Trauma insurance came out of South Africa where Dr. Julius Barnard, a leading heart surgeon recognised the same problem with many of his patients after suffering from a heart attack or having a by-pass operation, that they lack funds to cover medical and living expenses.

The Chances Of Trauma

Most of us are aware of the high risk of heart attack, stroke and cancer in our society. Whilst there is plenty of information publicly available, I have a knowledge of the different types of conditions that most trauma policies cover, and the statistical chances of clients suffering these events.

Trauma Definitions

Each trauma policy lists “insured events” so that in order to make a claim, the insured must suffer one of those events. Payment of the claim will depend on the insured satisfying the definition of the particular event suffered.

* Asteron – 2015

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BDM Financial Services specialises in providing cutting edge Business Insurance products and services. Key Person insurance is a product that requires particular expertise to ensure Stakeholders Equity & Interests are covered properly.

Some businesses are successful because of one or two “key people” in the business, and the loss of such persons can be financially devastating to the business.

There is nothing wrong with a company owning a life policy with all the trimmings, TPD and Trauma on a Key Person, with the Company being the “owner” of the policy. However, there may be different taxation consequences regarding premiums and the taxation of policy proceeds, which we need to discuss.

Insurers generally do not ask for financial evidence of the sum insured being applied for until this reaches something like $1,000,000 or more. So when the need for cover is less than such amounts, it’s a relatively simple exercise to get some Keyman cover into place.

But rather, all you need do, is try an estimate how much money a company would need
to be compensated for the loss of the Key Person.

By loss, we are referring to death, total and permanent disablement, or long temporary disablement which could be as a result of the Key Person suffering from a major medical trauma.

Typically, in calculating an appropriate amount you should consider factors such as:

  • Providing the company with a lump sum so that it can pay off all of it’s capital debts
  • Providing the company with a lump sum to use as income to pay expenses for a period. Rule of thumb – a year’s income might be required if the key person is really so instrumental in the company’s success
  • Providing the company with a lump sum to attract another appropriate key person – eg. they might need to recruit overseas for someone with similar experience, skills or personality of the key person.

There are no specific guidelines available on how to calculate cover, but the best estimates can be made by “knowing your client”.

For sums insured higher than 3 to 5 million dollar mark, you will need to have discussions with the underwriters to work through a figure that the insurer and the re-insurer can feel justified in issuing. This will require submission of financial evidence and the reasons why such higher sums insured are needed.

Another interesting factor exposed during the 1980’s, is that high profile “key people” don’t usually die of natural causes, but rather from something slightly sinister, such as car accidents, gun shots, and even suicide.

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General Advice Warning: The information contained in this website is for general information purposes only. The information is provided by BDM Financial Services and while we endeavor to keep the information up to date and correct, we make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability or availability with respect to the website or the information, products, services, or related graphics contained on the website for any purpose. Any reliance you place on such information is therefore strictly at your own risk.

Before investing in any product BDM Financial Services recommends that you first obtain a copy of the relevant Product Disclosure Document before making any decision regarding the purchase of or investment in that product or service in order to ensure that it is suitable for your own personal financial needs and circumstances.

Michael Lobodarz, Authorised Representative (no. 256607), Director of BDM Financial Services Pty Ltd ABN 53 115 925 141, Corporate Authorised

Representative (no. 319619) of, Loyalty Financial Group Pty Ltd, ABN 72 614 992 237, Australian Financial Services Licensee (no. 227096)