6. Insufficient Insurance Coverage and Structure

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There are six common mistakes that doctors make that are negatively impacting their financial future and are hurting them both now and when they retire.

 

Over the next six weeks we are going to look deeper into each mistake. Last week we looked at 5. Sub-optimal Debt Structures

 

The last one is: 6. Insufficient Insurance Coverage and Structure

 

The last common mistake and certainly not the least is Insufficient Insurance Coverage and Structure.

 

This is perhaps one of the most common mistakes and it occurs on various levels – for personal insurance so Life, TPD, Trauma, Income Protection and for most of our doctors, needle stick. The coverage is often insufficient by an amount perspective, inappropriate from a structural perspective, and in the wrong vehicle. For example we recently had a doctor whose income protection was in his Super, which is complete madness when it is deductible outside of Super

 

The insurance itself is often not what the doctor actually thinks they have and that comes down to the definition which is the difference between any cover and any occupation and own occupation for TPD – Total and Payment Disability. This means if the cover is under any occupation, the insurance company would not pay out unless the doctor cannot work in any industry. So you can have a leading Neurosurgeon but provided they can pack shelves at Pack and Save, they do not get the payout.

 

The second most common area from a insurance coverage perspective is just quite simply the structure of the insurance payout. If it is structured correctly the payout is ok and there is no tax issue where the payment comes to a family member. But if it is structured incorrectly the family member, who might get a very substantial payout, pays an excessive amount of tax on the income derived from that payout for their lives effectively.

 

So there are the 6 most common financial mistakes doctors are making. Essentially these mistakes are causing doctors to;

  • Pay too much tax,
  • Miss out on investments
  • Have increased risk and the diminished ability to retire
  • and have a lower cash flow

 

No wonder 80% of doctors delaying retirement for financial reasons. These mistakes are very, very common and we can help you to avoid these mistakes. If you would like to receive a Complimentary Assessment of your cash flow, risk profile, financial position and structures by one of our specialist Private Wealth Managers then simply click HERE today

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