Income Care with either monthly or lump sum benefits

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					Income Care
with either
monthly or lump
sum benefits
Important information
Total and Permanent Disability Cover and Income Care Cover are components
of the Personal Insurance Portfolio, issued by CommInsure, a registered
business name of The Colonial Mutual Life Assurance Society Limited
ABN 12 004 021 809 AFSL 235035 (CMLA) a wholly owned but non-guaranteed
subsidiary of the Commonwealth Bank of Australia ABN 48 123 123 124.
The taxation information and examples are of a general nature only and
should not be regarded as specific advice. It is based on the continuation of
present taxation laws (2008-2009 rates), rulings and their interpretation as at
the issue date of this brochure. As this advice has been prepared without
considering your objectives, financial situation or needs, you should before
acting on this advice, consider its appropriateness to your circumstances.
A Product Disclosure Statement issued by CMLA for Personal Insurance
Portfolio is available from your financial adviser, by calling 13 10 56 or from and should be considered in making any decision about
the product. CommInsure is a registered business name of CMLA.

Income protection insurance is a valuable
form of cover that provides up to 75% of your
income if you are sick or injured and cannot
work. Premiums are generally tax deductible.
Benefits are normally paid monthly and like
your income, these benefits are subject to tax.
Receiving monthly benefits makes sense if the claim period
is short and you eventually return to work, as it ensures you still
have money regularly coming in. But if your sickness or injury
is serious and you will never return to work then monthly
benefits may not be the best way to receive that money.
CommInsure’s Income Care Range is different to other income
protection policies due to our unique, no additional cost
feature that gives you the choice on how you would like to
receive your benefits for a serious claim and you are unable
to ever return to work:
(i) An ongoing monthly benefit subject to tax
(ii) A lump sum payment, which we can pay tax free.
You decide which option to take.
If your claim is not serious and you eventually return to work,
we (like most insurance companies) will pay the benefit only
on a monthly basis.

When does the lump sum option apply?
If you have an accident, or suffer from an injury
or illness that means you become totally and
permanently disabled (TPD) and you are unable
to return to work, then you can have the choice
to take either an ongoing monthly benefit or the
immediacy of a lump sum payment.#
# Referred to as Total and Permanent Disability (TPD) Cover Option
  in CommInsure’s Income Care Range.

What’s the difference between monthly benefits
and a lump sum?

    Monthly benefit               Lump sum
    – applies to all claims       – option applies if you become TPD

    Tax to be paid on benefits    Tax free benefits

    100% of your premium          90% of your premium is
    is tax deductible             tax deductible

    Provides regular cash flow    Lump sum could be invested
                                  to create ongoing income

    Ongoing claim forms           Once lump sum paid, no more
    and possible medicals         ongoing paperwork required
    and doctors reports
    could be required

    Can meet loan                 Could pay off large debts and
    repayments                    mortgage to reduce worries and
                                  save on interest costs

    Monthly benefits              Could require financial advice on
    help with budgeting           investing your lump sum and
                                  generating an additional income

    Monthly benefit could be      Lump sum can provide a buffer to
    eroded by unanticipated       cover large costs such as home and
    medical costs                 car modifications or non-claimable
                                  medical and treatment costs

How do I apply for this option?
To select the lump sum option you must tell us at time
of application and this is recorded in your premium quote.
If you do not choose this no additional cost option when you
apply for cover then at claim time a monthly benefit will be the
only type of payment offered.
How does tax apply?
If you select at time of application to receive only monthly
benefits for all claims, then 100% of the premium is tax
deductible. However, if you select to have the choice of
monthly benefit or a lump sum, then 90% of premiums are
tax deductible*. The remaining 10% of the Income Protection
premiums are deemed to be cost related to the tax free
lump sum benefit so are not tax deductible. Each year in
July we will send you a letter advising the amount to put
down as a deduction in your tax pack.
Even though your premiums tax deductibility reduces slightly,
it could mean a large tax saving if a lump sum is paid tax free.
Please see the case study that explains how this works.
* Exclusive ruling sought by CommInsure. ATO tax ruling CR2005/15,
  30 March 2005.

How do we calculate the lump sum amount?
The Lump Sum Benefit is calculated as the lesser of either:
•	 $3 million or
•	 An amount equal to an age-based multiple of the
   Annualised Monthly Benefit

     The Lump                                                  Age-based
    Sum Benefit         =      Monthly Benefit            x     multiple
                             (i.e Monthly Benefit x 12)

    If you have selected the Super Continuance monthly benefit option
    we also add this to your Monthly Benefit before applying the formula.

Age based multiple is:

    Age next birthday                        Multiple

    Less than 40 years                       15

    40 – 44 inclusive                        13

    45 – 49 inclusive                        11

    50 – 55 inclusive                        9

    56 or more                               65 minus their age next
                                             birthday when the Lump Sum
                                             Benefit becomes payable

If the lesser of the above amount is a nil or negative amount,
no Lump Sum Benefit is payable.

Edward’s Story

Edward (35) is an IT consultant at a large investment bank
earning $142,000 pa. His financial adviser recommended and
put in place a wealth protection plan, including $1m of life
insurance and TPD cover inside their superannuation fund.

He also took out income protection insurance of $8,855
monthly benefit with a $550 superannuation benefit with a
3 month waiting period and benefit period paid to age 65.
His income protection premiums were:

 Income Care            Premium             Net premium
 Premium                payable         (after tax deduction)

 Edward                 $1,350.81             $846.28

Unfortunately, Edward was involved in a serious motor
vehicle accident while driving home from work one night.
Edward suffered a major head trauma, multiple fractures
and a spinal injury which left him a quadriplegic.
Edward’s insurance case manager felt that it would take
approximately 3 months in order to assess the claim fully and
organised for a bed confinement benefit payment of $27,000
to be paid immediately to Edward.

Once the claim was finalised Edward received payment made
up of the Income care lump sum benefit of $1,593,900, and
Super Continuance option of $99,000.
The whole of this $1,692,900 benefit amount was tax free.
These substantial funds helped cover the medical costs
and rehabilitation care as a result of his paralysis. Importantly,
he was also able to pay off the mortgage, and commence
modifications to the family home.
Edward’s details
Age = 35 years
Age-based multiple = 15
Monthly Benefit = $8,855
Super Continuance = $550

    Benefit                          Monthly              Lump Sum
                                     Benefit              Payment

    Monthly sum insured              = $8,855             = $8,855
    Super Continuance                = $550*              = $550
    Total Monthly Benefit            = $9,405             = $9,405

                                     = $6,668#            = $1,692,900
    Net benefit                        (approximate         tax free
                                       net of tax)

    Premium payable                  = $1,350.81          = $1,350.81

    Net Premium payable
                                     = $790.22            = $846.28
    (after tax deduction)

So Edward’s net premium after tax deduction was $56.06 more
however, Edward was able to receive $1,692,900 tax free.
* This amount is paid direct to Edward’s nominated superannuation provider.
# Note: Tax is not deducted from benefit payment but is payable via your tax
  return assessment.

Key benefits

With CommInsure’s Income Care, when you select the tax-free
lump sum benefit (in the event of TPD) you are able to:
•	 Certify your disability just once at claim time, and avoid
   reassessment of disability every month.
•	 Keep the payment, regardless of any future medical
   advancement rendering you healthy and capable of working.
•	 Perhaps invest your lump sum payment and generate
   an additional income stream.

Why CommInsure?

CommInsure has received a number of awards recognising
our comprehensive product ranges, excellent customer
service and commitment to leading industry and consumer
education by building awareness of the need for insurance.
Below are just some of our achievements:
•	 Best Life Insurance Company Australian Banking
   & Finance Insurance Awards 2008 and 2005
•	 Life Insurance Company of the Year Plan for Life
   & Association of Financial Advisers 2007
•	 Life Insurance Company of the Year Australia and
   New Zealand Institute of Insurance and Finance Awards
   2007 and 2005
•	 Best Income Protection Money Magazine Best of the
   Best 2007 Awards
•	 Income Protection Insurance 2007 - Winner Plan for
   Life & Association of Financial Advisers
•	 Most Innovative Income Protection Product Asset
   Magazine Awards 2006
•	 Term Life Product of the Year Personal Investor
   Magazine Awards for Excellence in Financial Services 2005
•	 Trauma Product of the Year Personal Investor Magazine
   Awards for Excellence in Financial Services 2005
   (joint winner)
•	 Best Call Centre Australian Banking and Finance
   Insurance Awards 2005

13 10 56
8am – 8pm (Sydney time)
Monday to Friday

CIL928 160309

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Description: Income Care with either monthly or lump sum benefits