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Protect income and assets

While investment risk is top of mind for most people, there is a more prevalent financial risk millions of Australians are exposed to every day, and that risk is lack of insurance or underinsurance. Most of us are reliant on our employment income as our primary source of income and approximately 70% of us don’t have income protection insurance.

Some see the cost as prohibitive, while others are under the common misconception they are adequately covered by their super fund. In reality, the Income Protection insurance provided within most super funds often doesn't cover your full employment income and may have a short payment period (usually only two years). There's also rarely a lump-sum payment available for those recovering from a critical illness. The fact is, as medical technology advances and we live longer lives, a period of time spent living with a disability or chronic/serious illness is an increasingly likely scenario.

In addition, it is also important to consider your level of Life insurance. The automatic amounts provided in many super funds is often barely sufficient to eliminate your mortgage, let alone pay off any other debts or provide a sufficient investable amount to generate an income for the surviving spouse and children.

At FMD Financial our Advisers have the skills and qualifications necessary to undertake a full review of your personal insurance position to ensure that you've got the right types and levels of cover for your personal and financial situation.

Planning for an uncertain world

The problem of underinsurance is even more concerning when you consider the way the world of work is changing. Most skilled professionals can earn a greater relative annual income than they could thirty years ago, but over that time our incomes have also become less secure. Just as the traditional path to ageing has changed, so has the traditional path to financial security after 50. The end of the ‘job for life’ means more opportunities to re-evaluate our financial direction, along with the need to take greater control of our income, superannuation and investments to secure the future.

As you embark on any investment strategy it is important to have the right level of insurance to protect the wealth you are accumulating or managing. The more risk you are prepared to accept to grow your wealth, the more important it is to have the right level of insurance to protect against adverse outcomes.

Click here to see the main types of insurance and how an FMD adviser can help.

Good to know

How our careers are changing

Over the last decade globalisation has caused a rapid restructuring of Australian industry from low tech manufacturing to high tech innovation in services, and with it the rise of the knowledge worker. With their skills in demand, a growing number of professionals in all spheres are going it alone consulting and contracting their services.

1.9 million people or 17% of the workforce were self-employed as either business owners or independent contractors in 2012. Ongoing structural change in the economy is likely to see this number grow as companies continue to streamline management and professionals over 50s seek to find meaningful careers in the next phase of life.

What to consider in retirement

It’s important to remember that your retirement savings will need to support your income needs over the retirement phase of your life. Any pension payment established as part of a super strategy is not guaranteed to last your entire lifetime. Instead, how long your savings last will depend on the amount of income you need and the investments supporting the income stream you have established.

Good to know

Protect income and assets within the super system 

  • Diversifying the mix of investments in your pension can reduce the impact of share market movements over the long term.
  • An income stream (or a lump sum) can be paid to your spouse or Estate when you die, enabling your family to retain tax-effective income.
  • ‘Recycling’ strategies can be used to change the tax components of your super fund to ensure that any ‘death benefits tax’ is reduced.
  • Personal insurance (Life & TPD) becomes more costly as you get older and the premiums can become unsustainable.

Take the first step. Complete our quick and easy online financial health check or book a free 1 hour consultation with a qualified adviser.


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