How to claim cash for a terminal illness so you can aid family
FOLLOW the right strategy and you can get an early super payout for a terminal medical condition so you can have more family time, writes the Barefoot Investor.
Barefoot Investor
Don't miss out on the headlines from Barefoot Investor. Followed categories will be added to My News.
FOLLOW the right strategy and you can get an early super payout for a terminal medical condition so you can have more family time.
MURRAY ASKS: I am 49 years old. Thirteen years ago I was diagnosed with terminal brain cancer (and 13 years later I am alive and grateful!). At the time, I was given a 3 per cent chance of surviving for 12 months. Recently I was told that if I had applied for a life insurance payout and super payout, I would have got it. I continue to have an MRI twice a year but am still considered terminal and incurable. In the last two years the tumour has been slowly progressing, but I am still well. So my question is: what are my chances of getting a payout now? I would like to enjoy life with my wife and three kids while I still can.
BAREFOOT REPLIES: You thought fighting off brain cancer for 13 years was hard? That’s nothing compared to your next battle … getting your insurance company to pay you out! (I’m joking … but only slightly.) After all, we’ve seen the scumbags at Commonwealth Bank’s insurance arm, CommInsure, deny claims to terminally ill young fathers (and many others), all in the name of “procedures’’. Fair dinkum, if I was the leader of that business, I would have resigned in shame. That didn’t happen. Even when faced with these horrible allegations, no insurance executive lost their job ... or their bonus. Okay, rant over. Yes, you should most definitely lodge a claim with your super fund. Apply for a “release of your super benefits on the basis of a terminal medical condition”. You’ll need to get two doctors (one of whom has to be a specialist) to certify that you’re suffering from an illness that will result in your death within the next two years (before 1 July 2015 you had to have less than 12 months to live, so it’s been extended). If you can satisfy the condition of release under the terminal medical condition, you’ll be able to access your insurance from super tax free, and they should process your claim quickly. Note to the reader: we’re helping Murray with his application.
SUPER FUND MOVE
FAY ASKS: We are a retired couple who draw down from our pension account. We receive $290 combined per fortnight from Centrelink, which will cease at the end of the year. We have a financial planner who manages our retirement fund, but the fees are $11,000 per annum. We are thinking of changing to either VicSuper or AustralianSuper, both of which seem to have a more realistic fee structure. Is it unwise to undertake such a move now that we are in the retirement phase?
BAREFOOT REPLIES: Okay, so there are a few not-so-obvious things you can do to try to keep your pension in light of the incoming asset test changes. First, if you’re Age Pension age and your partner isn’t, then consider transferring funds to your partner. Second, you can also reduce the valuation on your household contents and personal effects to Gumtree value. Third, you can make some needed household improvements (no jacuzzis) and prepay your funeral. But we’re just swimming around the shallow end of the pool, aren’t we? So let’s deal with the obvious: you’re talking about saving $7540 in pension payments each year, while you’re paying an adviser $11,000. Winner, winner chicken dinner! You’re being charged a percentage of your asset which I call a “rich bastards tax”. (Let’s say I have $500,000 and I get charged 1 per cent per annum; so they charge me $5000. But say you have $1 million, so they charge you $10,000. We get put into the same investments and get the same returns. You just pay double!) What most retirees fail to understand is that they pay the bulk of their super fees after they retire, when they can least afford it. Move to a cheaper fund. It’s the one thing about your investments that you can control.
$350,000 AND POOR
DENNIS ASKS: I am 54 years young — fit and healthy. I own my own home and have $500,000 in superannuation, though it is barely treading water at the moment. I have two negatively geared rental properties. My wife and I earn a combined $350,000 per annum, yet we are like a monkey on a greasy pole financially. Where do I invest to break out of the greasy pole scenario and get moving towards retirement?
BAREFOOT REPLIES: If earning $350,000 is a “greasy poll”, well lube me up, put on the sexy music, and throw me some peanuts, cobber! I went to GlobalRichlist.com and found that on your income of $350,000 a year … you’re in the 0.04% richest people in the world by income. The only monkey that’s richer than you is Michael Jackson’s old mate Bubbles. The reason you feel poor is probably because you have some accountant in your ear helping you to lose a lot of money on property in the name of tax. Here’s the unsexy truth: wealth comes through saving. And on your income you have the ability to save a lot. Direct the money first into your super fund, and then to a family trust that invests in good quality shares. And stay away from monkeys.
HARD WORK PAYS OFF
TOM WRITES: Last year I wrote to you. You not only replied in the newspaper, but you personally called me to give some advice. I just thought I would update you. Here goes: I am driving around in a crappy car I bought with cash after selling my hugely expensive one. I have no more credit cards. I asked the girl of my dreams to marry me, and she said yes. Our wedding (happening soon) is already paid off thanks to us working overtime and taking jobs on the side. We have saved up a deposit for our first home. I am even taking your business advice — learning how to quote for and run jobs, and how to obtain and work with clients. All up, thank you, mate! You have changed my life, and now my fiancee’s.
BAREFOOT REPLIES: You did all the work, mate, and you should be really proud of yourself. You’ve changed your family tree.
The Barefoot Investor holds an Australian Financial Services Licence (302081). This is general advice only. It should not replace individual, independent, personal financial advice
Buy Scott Pape, the Barefoot Investor: the only money guide you’ll ever need for $27.95 including delivery. Order online at heraldsun.com.au/shop or call 1300 306 107. For mail order, post a cheque/money order to: Herald Sun Shop PO Box 14730 Melbourne Vic 8001. Also available at all good book stores
Originally published as How to claim cash for a terminal illness so you can aid family
Why all that glitters is not gold
The price of gold may be on the rise but it’s not quite as shiny as it seems. When it comes to long-term gain, it pays to follow the golden rule — only invest in things that regularly put money back in your pocket, writes the Barefoot Investor.
Don’t get high on the short-term sugar hit
Despite the COVID crisis, money questions have been flooding in from readers about how to buy and trade stocks, or even gold. Maybe it’s down to raiding super, or the government stimulus, but the key to financial control is first to get out of debt, writes the Barefoot Investor.