Frequently Asked Questions

General FAQs
Life Insurance FAQs
Total and Permanent Disability (TPD) Insurance FAQs
Income Protection FAQs
Trauma Insurance FAQs
Superannuation FAQs

General FAQs

q. How do I apply, or get an insurance quote through xLife?
a. You can apply or get insurance quotes on life insurance, income protection or trauma insurance online, or call us on 1300 135 205.

q. How do I get superannuation advice through xLife?
a. We offer either superannuation strategy advice only, or strategy and fund advice. You can apply online for superannuation advice, or call us on 1300 135 205.

q. Which insurance companies do you deal with?
a. We deal with a number of top Australian insurers including:

• AIA (AIG)
• AMP
• Asteron
• Aviva
• AXA
• CommInsure
• OnePath (ING)
• Macquarie
• MetLife
• MLC
• TAL
• Zurich

q. What are your fees?
a. xLife does not charge a fee for its insurance advice or for finding you an appropriate insurance provider. We are paid a commission by the recommended insurance company which allows us to deliver this service free to you. Please refer to our Financial Services Guide (FSG) for further information.

q. Are you authorised to provide advice on the amount and type of cover I should have?
a. Yes. We have fully qualified Specialist Financial Advisers who specialize in Life Insurance, Income Protection, Trauma Insurance and Superannuation. Please ask us to do so if required.

q. Am I locked into an insurance policy for a certain period?
a. No, generally a term life insurance, TPD, trauma insurance or income protection policy can be cancelled at any time without penalties.

q. How do I pay the premiums for my insurance policy & how often?
a. Most companies offer the following payment facilities:
1. Direct Debit from your nominated bank account
2. Credit Card
3. Cheque or money order

With the following payment frequency options:
1. Monthly
2. Quarterly
3. Half-yearly
4. Annually

Please note that our quote assumes that a monthly premium was the preferred choice. Should you wish to pay yearly there is generally a 5%-8% discount provided by insurance companies.

q. How do the policies xLife have quoted on compare?
a. xLife compares all 14 companies when finding the most suitable policy for you. Generally speaking we look at cost when comparing Term Life. However for Income Protection & Trauma Insurance the quotes provided are for higher grade policies. Please be aware of advisers who provide you with poorer graded policies. These do not provide the same level of cover.

q. What is the difference between stepped & level premiums?
a. A 'Stepped Premium' means that the premium increases with the life insured's age. A 'Level Premium' means that the premium is not affected by you growing older, and generally stays the same up to age 65. After this time they revert back to Stepped. We generally quote you on Stepped Premiums. If you would like to find out how much level premiums would cost please let us know. Read more on stepped and level premiums.

q. Will I need to have a medical examination, & if so, how much does it cost?
a. Most people will not need to undertake a medical examination. However when the sum insured is of significant value (generally more than $1 million of cover) or you have a previous medical condition or a family medical history then you may require one. The 'medical' required may just be a quick check-up which is very similar to a typical check up and/or alternatively a blood test and/or a doctor's report. These can be performed by either your local GP or a mobile service to your office or home. The cost of any of these is paid for by the insurance company.

q. What will be the tax implications on my premiums payments?
a. Income protection insurance premiums are fully tax deductible, however any benefits paid will be assessable for income tax. Term life insurance premiums are not tax deductible (unless held in a superannuation fund). Your personal situation may vary and it is best to talk to a tax accountant about your situation if you are unclear.

q. Can the Insurance Company cancel my policy due to health?
a. No, the insurance company cannot cancel your policy due to a change in your health.

q. Am I covered while travelling overseas?
a. Yes, you are covered 24/7 worldwide.

q. How much cover do I need?
a. How much life, TPD, trauma and income protection cover you need, will vary according to your individual circumstances. In general, you should consider:

• Any other Life, Income Protection and/or TPD policies you may have;
• Whether or not you have dependants; and
• Whether or not you have a mortgage, or any other debts for which you are responsible such as other personal loans and credit cards.

The purpose of insurance is to extinguish debts and provide for loved ones. If you are unsure about the level of cover you require, speak with an xLife specialist financial adviser on 1300 135 205 today.

q. I quit smoking six months ago. Do I need to disclose this to you?
a. Yes. If you have smoked tobacco or any other substance in the last 12 months, you will be classified as a smoker and will need to tell us when you apply for insurance.

Life Insurance FAQs

q. What is life insurance?
a. Life insurance is also known as term life insurance, and pays a lump sum to the estate of the person or the nominated beneficiary on the death of the life insured or on the diagnosis of a terminal illness of the insured (who usually has 6-12 months left to live).

q. Can I get just life cover by itself?
Yes you can. Although life insurance policies also offer you the option to take out further cover in the policy such as Total Permanent Disablement (TPD) Insurance or Trauma Insurance cover.

q. I am self-employed. Why do I need life insurance?
a. When it come to insurance, self-employed people are just like employed people in that they face similar needs – with a few more challenges. Self-employed people may have business partners, personal guarantees on business loans as well as the standard mortgage and dependants to consider.

If you are self-employed, and using insurance for business purposes you may also find that premiums can in some circumstances be tax-deductible.

q. Who can apply for life insurance?
a. You must be between a certain age range to apply for life cover. This age range in usually 11 to 75 years of age, but varies slightly from insurer to insurer.

You can also apply for cover if you are a holder of Australian or New Zealand Citizenship or an Australian Permanent Residency Visa and you are permanently residing within Australia at the time of your application.

If you hold any other type of visa, such as 457 Visa's, and are permanently residing within Australia at the time of your application, xLife may be able to help you apply for life insurance cover. Speak to an xLife adviser to discuss your options.

q. Can my partner and I take out a policy together?
a. Yes, up to two people can be insured on one policy. This could be you and your partner, or another person.

q. Can I add another Life Insured to my policy at a later date?
a. Yes, but you cannot have more than two people covered on any one policy.

q. Can I choose who gets the money if I die?
a. Yes, you can choose up to five nominated beneficiaries to whom the lump sum payment can be paid out to. In the case where no beneficiary is nominated, the lump sum is paid to the policy owner/estate.

Total Permanent Disability Insurance (TPD) FAQs

q. What is TPD insurance?
a. TPD Insurance is offered as additional cover which is added to a life insurance policy. It provides a lump sum to the life insured on being diagnosed as being totally and permanently incapacitated and unable to work. The definition of work can be chosen as either any or own occupation at time of application.

q. What is the difference between 'Own' and 'Any' Occupation definitions?
a. TPD definitions vary between insurers but there are differences between two main types of TPD:
Own Occupation - You will be paid if by reason of accident or injury you are unable to work ever again in your own or normal occupation.
Any Occupation - You will be paid if by reason of accident or injury you are unable to work ever again in any occupation for which you are reasonably suited by education, training or experience.

Trauma Insurance FAQs

q. What is Trauma Insurance?
a. Trauma insurance (also known as critical illness insurance) pays a lump sum of money upon the occurrence of an insured medical event, provided that the definition of that medical event in the policy is satisfied.
The majority of trauma insurance claims are from:

• Heart attack
• Heart related condition
• Malignant Cancer
• Stroke

The specific conditions are nominated in the policy. Better quality policies will define up to 30 - 35 individual conditions. The incidence of claiming is proportionally higher than claims for life & TPD and therefore this cover is more expensive.

q. Is there a waiting period?
a. In most cases "accidental" types of traumas are covered immediately, although many insurers impose a waiting period (usually 90 days after the policy is accepted) for certain illnesses eg cancer, stroke, heart attack. This is particularly important when changing or replacing policies as you may not be covered during the waiting period on the new policy for certain conditions.

Income Protection FAQs

q. What is income protection?
a. Income Protection insurance provides cover of up to 75% of your gross income should you become unable to work due to sickness, accident or injury. The payments owing to you are paid in arrears, one month from the end of the 'waiting' period and last until the earlier of you either being able to return to work or the end of your nominated 'benefit' period.

q. How long is the income protection insurance waiting period?
The 'waiting period' is the minimum number of days a person has to be unable to work before the income benefits start to accrue. Generally the longer the waiting period, the lower the cost of premiums. Waiting periods range from 14, 30, 60, 90, 180, 360 days or 2 years.

q. What is the benefit period for income protection cover?
The 'benefit period' is the length of time that the claimant can receive benefits from the insurer. The benefit period starts from the expiry of the specific waiting period selected and continues for the determined period so long as the insured continues to be totally or partially disabled and unable to work. The longer the benefit period, the higher the premium. Benefit periods range from 2, 5 years up to 60 or age 65.

q. What is the difference between an Agreed Value Policy and an Indemnity Policy?
Agreed value policy requires you to prove your income upfront, however once this is completed your benefit generally cannot fall beneath this agreed value in the future. This policy is suited to self employed and those with variable incomes. You pay extra for this type of policy.
Indemnity policy - requires you prove your income at time of claim. If your income has dropped since you commenced the policy, you may not be able to claim the full benefit. These policies are generally cheaper.

q. How much income protection cover can I purchase?
a. It can depend on your occupation. The maximum amount of cover you can purchase is usually limited to:

• If you are employed: 75% of your current gross income (including employer superannuation contributions and packaged fringe benefits).
• If you are self employed: 75% of the income generated by the business due to your personal exertion less your share of expenses.
• A lower percentage of income may apply above certain income limits.

q. How are premiums set for income protection insurance?
a. Income insurance premiums are set depending on:

• Age;
• Gender;
• Occupation (for example, a manual laborer pays different premiums to an office worker);
• Whether or not you smoke;
• The time you choose to wait before receiving payment;
• Waiting and benefit periods;
• Amount of income insured; and
• Agreed or indemnity type policy.

Please note that Income Protection premiums are fully tax deductible, however any benefits paid will be assessable for income tax.

Superannuation FAQs

q. What is superannuation?
a. Superannuation (also known as 'super') is a tax-effective means of saving for retirement by putting aside and investing money during your working life.

An employer and / or employee usually make superannuation contributions into a superannuation fund that is regulated by legislation. As of 1 July 2002, the minimum contribution level is 9% of your salary. This contribution is known as the 'Superannuation Guarantee (SG)'.

Superannuation savings are pooled together and invested in different sectors (e.g. property, cash, fixed interest, equities, etc.) Depending on your superannuation fund you may be able to determine your exposure to each of these sectors.

q. What kind of superannuation advice do you offer?
a. We offer the two main types of superannuation advice that is most asked for by clients. These include:

• Superannuation strategy advice only - where we do not review your existing super fund; or
• Superannuation strategy & fund advice (full service) - where we do a full review of your existing fund's performance, fees & features, and suggest appropriate superannuation strategies.

q. Why is having a superannuation fund important?
a. We are now living longer than ever before, which means that our superannuation savings also has to last longer to fund our retirement lifestyle. Superannuation can:

• help provide you with a financially comfortable and secure retirement
• allow you to take advantage of favourable tax treatment of superannuation contributions and benefits
• allow you to take advantage of life insurance offered through your superannuation fund.

q. What types of superannuation funds are available?
a. There are 6 main types of superannuation funds:

• Industry Fund
• Employer Fund
• Government Fund
• Retail/Public Offer Fund
• Self Managed Super Fund
• Defined benefit fund

q. How much super should you save for retirement?
a. Working out how much you will need to fund your retirement may not be easy but generally, you should allow for at least 60% of your pre-retirement income for each year of retirement. If you want to improve your standard of living in retirement, you'll possibly need more.

Remember that when you've retired you may save money on work-related costs, but basic living expenses will be the same, and you may even choose to spend more on your leisure activities and interests. Longer term, be aware of rising health and medical costs, as well as the impact of inflation on your savings.

q. How do I ensure that I will have enough super to retire on?
a. Start saving today! Even a few dollars a week can make a big difference to the sum of money available to you when you retire. Basically, the sooner you start saving, the more time your money has to grow. When you invest regularly, no matter how little you put away, you'll enjoy the effects of compounding. Compounding happens when income earned on your savings is re-invested, so you earn money on your initial capital as well as on any income you have already earned.

q. Who can invest in super?
a. You - Subject to certain contribution caps, anyone under 65 can invest in their own superannuation. Contributions can be made with:

• After tax income - voluntary contributions
• Pre-tax income - typically this involves a salary sacrifice arrangement with your employer, whereby you direct some of your pre-tax income into super.

Your employer - Employers are generally obliged to pay a percentage of an employee's salary to superannuation, and may contribute more if they wish, up to certain maximums.

Your spouse - If you are under age 70, you can make contributions on behalf of your spouse, up to certain maximums.

q. What is a superannuation benefit payment?
a. A superannuation benefit payment is a lump sum payment from a superannuation fund. If you are over age 60, your superannuation benefit payment is tax-free. If you are under age 60, your superannuation benefit payment will comprise of two different components - a tax-free component and a taxable component.

q. When can you get your superannuation?
a. You generally cannot receive benefits from your superannuation fund until you retire and reach what the law calls your 'preservation age'.

Date of Birth                    Preservation age

After June 1964                    60

July 1963 - June 1964           59

July 1962 - June 1963           58

July 1961 - June 1962           57

July 1960 - June 1961           56

Before July 1960                   55

The law does allow people to get their superannuation earlier in some circumstances. These include cases where a person suffers permanent incapacity for work, in some cases of severe financial hardship, or on 'compassionate grounds'. You can find out more from your superannuation fund.

q. Can you get your superannuation and continue to work?
a. Yes, but only if you have reached your preservation age. Your fund can let you draw on your superannuation without having to retire permanently from the workforce. This means you could continue working part-time and use part of your superannuation to supplement your income, instead of leaving the workforce altogether.

If you choose to keep working, you will have to receive your superannuation as a particular type of pension. These pensions, known as 'complying' pensions and 'allocated' pensions, will generally not be 'commutable'. Broadly speaking, this means you won't be able to stop the pension and cash it out as a lump sum.

However, if you select a 'non-commutable' allocated pension, you will be allowed to take a lump sum once you retire or reach age 65. Or you can stop the pension and put your benefits back into your superannuation fund, for example if you decide to go back to full-time work.

q. How do I find lost super?
a. Often people lose track of their superannuation funds, especially when frequently changing jobs. If you have lost track of your superannuation from a previous employer, we can help you find it. Read our tips on how to find your lost super.

July 2009