Page 9 - Wealth-Adviser-Issue-119 (FWP)

ISSUE 119
SEPTEMBER 2025
Ask a person(s), such as your spouse or estate. A non-binding

nomination only guides the trustee, who will then decide
Q&A: Question who receives the funds. Binding nominations can also be
lapsing (expiring every three years unless renewed) or
non-lapsing (remaining in place until changed or revoked),
Question 1: depending on the rules of your fund.
I noticed my income protection policy has something Tax is also important. Death benefits paid to dependants
called a waiting period. How does this affect my cover and like a spouse or young children are generally tax-free.
premiums? Benefits paid to non-dependants, such as adult children,
The waiting period on an income protection policy is the may be taxed.
length of time you must be unable to work due to illness or To ensure your super is distributed according to your
injury before your benefits start being paid. Common wait- wishes, it’s important to review your nominations regularly
ing periods range from 14 days up to two years. A shorter and coordinate them with your estate plan. A financial
waiting period means you’ll receive payments sooner, which adviser can help structure this in the most effective way
can be helpful if you don’t have much in savings or sick
leave to fall back on. However, policies with shorter waiting Question 3:
periods usually have higher premiums. Can I access my super early if I’m facing financial hardship?
On the other hand, choosing a longer waiting period can Super is usually preserved until retirement, but in certain
significantly reduce the cost of cover but requires you to rely on cases you may be able to access it early. Under severe
savings, sick leave, or other resources to get through the gap. financial hardship, you must show you’ve received eligible
The right choice often depends on your cash reserves, employ- government income support for at least 26 consecutive
ment entitlements, and household financial commitments. weeks and cannot meet essential living costs. Withdrawals
Your adviser can help you strike the right balance be- are subject to limits and conditions.
tween affordability and protection, so your policy works Another option is access on compassionate grounds,
effectively when you need it most. which may be approved for expenses such as medical treat-
ment, funeral costs, or preventing mortgage foreclosure.
Question 2: Applications are made through the ATO or your fund, and
What happens to my super when I pass away? strict eligibility rules apply.
Superannuation doesn’t automatically become part It’s important to remember that withdrawing super
of your estate. Instead, it’s paid out as a death benefit to early reduces your retirement savings and may trigger tax
eligible beneficiaries. How this is handled depends on the implications. A financial adviser can explain the rules, help
type of nomination you’ve made. assess whether early access is the best option, and discuss
With a binding nomination, your super fund must pay alternatives that may ease financial pressure.
your balance (and any insurance proceeds) to the nominated

Future Wealth Planners

Level 1, 176 Main Street
Osborne Park WA 6017

P.O. Box 16
Osborne Park WA 6917

P: 08 9207 3844
W: www.fwplanners.com.au
E: clientservices@fwplanners.com.au

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