For many high-earning professionals, executives and business owners, there’s a quiet confidence that serious illness, injury or death is something that happens to other people. But life doesn’t always follow the plan. And when it doesn’t, the emotional toll is only part of the story, and the financial impact can be just as life-altering.
That’s why personal risk insurance isn’t just a policy. It’s a pillar of a well-considered financial strategy. And it’s why, when the unthinkable happens, the first call should be to a trusted financial adviser.
In this article, we explore why having the right insurance in place matters, what to do when a diagnosis or death occurs, and how a financial adviser, especially one who works in coordination with legal and accounting professionals, can help protect what matters most.
“It’ll Never Happen to Me”… Until It Does
The sentiment is common. But so is the reality that unexpected events happen every day to people in the prime of their lives, people with families, businesses and a lot to lose.
There’s a saying worth remembering only insure what cannot be afforded to lose. That includes income, the ability to care for loved ones and the legacy built over a lifetime.
Personal risk insurance, when properly advised and structured, can protect all of that. But it’s not just about having a policy. It’s about knowing what to do when it’s needed and having the right people in place to guide the process.
A Real Story: When Planning Meets Reality
Ben and Sally (names changed for privacy) were a successful couple in their 50s. They sought financial advice after realising their growing wealth, including an Employee Share Scheme, needed professional oversight. Initially, they hadn’t considered personal risk insurance as part of their planning.
Their adviser helped them understand the difference between generic insurance and a tailored, advised strategy. Together, they structured cover that aligned with their goals and family needs.
A few years later, Ben was diagnosed with cancer.
The adviser immediately activated claims on Ben’s income protection and trauma policies. The benefits covered medical costs and maintained the family’s lifestyle. Ben recovered and returned to work, but the cancer returned, and this time it was terminal.
The adviser reinstated Ben’s income protection benefits and began coordinating across all areas of their financial life. This included:
- Managing TPD and life insurance claims
- Structuring payments through superannuation to avoid unnecessary tax
- Splitting Sally’s concessional contributions with Ben to increase accessible funds
- Establishing a self-managed super fund (SMSF) to optimise control and flexibility and save significant tax for Sally, post Ben’s passing
- Retaining funds in one of Ben’s existing super accounts to access tax-free money under the terminal illness condition of release
- Collaborating with their lawyer to update Ben’s estate plan and protect the family’s assets
The result was a carefully sequenced strategy that maximised their financial outcome and gave them peace of mind during an incredibly difficult time.
What to Do When Life Changes in an Instant
When a diagnosis is made or a loved one passes away, it’s hard to think clearly. That’s why the first step should always be to contact a financial adviser. At Executive Strategies, advisers act as the central coordinator working with accountants, lawyers, super fund trustees and insurers to ensure every step is handled with care and precision.
Here’s what that process can look like:
- Pause and Breathe
Grief and shock can cloud decision-making. Unless there are urgent financial needs, it’s okay to take a moment. Our financial advisers can help clarify what needs to happen now and what can wait. - Activate Claims
Your adviser will manage the claims process with insurers, whether it’s income protection, trauma, TPD or life cover, ensuring benefits are paid promptly and correctly. - Coordinate with Professional Partners
Our financial advisers work closely with accountants and legal professionals to align insurance benefits with tax strategy, estate planning and superannuation structures. - Manage Tax Implications
Insurance payouts can have tax consequences, especially if paid from superannuation or to non-dependants. Our financial advisers help structure payments to minimise tax and maximise outcomes. - Review Superannuation Access
If diagnosed with a terminal illness or permanently disabled, early access to super may be possible. Financial advisers guide clients through the conditions of release and help make informed decisions. - Protect the Legacy
Financial advisers ensure estate plans reflect the client’s wishes and that their family is protected, both financially and legally.
Understanding the Tax and Superannuation Landscape
Many people assume that death automatically triggers large tax bills. But the reality is more nuanced.
- Superannuation: If paid to a spouse or minor children, super benefits are generally tax-free. But if paid to adult children, the taxable component may attract 15 percent tax plus Medicare levy. Strategies like withdrawal and re-contribution or SMSF structuring can help reduce this burden.
- Life Insurance: Generally tax-free when paid to financial dependants. But if linked to business agreements or paid to non-dependants, tax may apply.
- Investment Assets: Capital gains tax may apply if assets are sold by beneficiaries. With the right planning, this can be managed effectively.
- Executive Share Schemes: These can trigger tax events upon death, especially if shares are unvested. Keeping records and planning ahead is essential.
- Estate Planning: Without a clear plan, an estate could face delays, unnecessary tax and even disputes. Advisers work with legal teams to ensure wishes are honoured and families are protected.
Final Thought: Insurance Is the Beginning, Not the End
Having a policy in place is just the start. Knowing what to do when it’s needed and having the right people around to guide the process is what truly protects a family.
At Executive Strategies, we don’t just help clients choose a policy. We help you navigate every step of the journey from planning and structuring, to claiming and coordinating, to protecting what matters most.
If you’ve been putting off this conversation, or if you’re unsure whether your cover is enough, now is the time. No pressure. No obligation. Just a conversation about what matters most and how to protect it. Because when life changes in an instant, the right advice can change everything. I invite you to give me a call on +61 (0) 7 3007 2080 or email contact@executivestrategies.com.au to request a call back.
Executive Strategies is a specialised information hub for executives and senior managers who may have founded their own business or who work for growing private, ASX listed companies or government businesses. Its purpose is to provide access to specialist advisers and information that addresses the often-complex issues affecting their personal prosperity.
James Marshall is a financial adviser and specialised ESS strategist. To learn more about James Marshall, visit this link.
Stratus Financial Group and its advisers are Authorised Representatives of Fortnum Private Wealth ABN 54 139 889 535 AFSL 357306. This advice is general and does not take into account your objectives, financial situation or needs. You should not act on it without first obtaining professional financial advice specific to your circumstances.
Please note: For advice and services relating to this matter that are not offered under the Fortnum Private Wealth AFSL, in accordance with our collaborative advice model, when required, such matters are referred to appropriately qualified professionals.
