Page 9 - FWP Wealth-Adviser-Issue-120 (FWP)

ISSUE 120
SEPTEMBER 2025
Ask a five-year period. Anything above these limits is considered a

“deprived asset” and will still count towards your asset and
Q&A: Question income tests for five years, even though you no longer hold
it. This means that while gifting can be a way to help family
or reduce the size of your estate, it may not always improve
your Centrelink position.
Question 1: It’s also important to think about whether giving money
I’ve been told my income protection benefit period only away leaves you with enough to fund your own lifestyle and
runs to age 65. What does that actually mean for me? future care needs. A financial adviser can help you under-
The benefit period on an income protection policy refers stand the rules and explore strategies that support your
to the maximum length of time you’ll receive payments if goals without putting your financial security at risk.
you’re unable to work due to illness or injury. Many policies
have a benefit period that runs until age 65, which means Question 3:
that if you make a successful claim before then, the insurer What happens if I need to access my super early due to
will continue paying your benefit up until your 65th birth- financial hardship or medical reasons?
day, provided you remain unable to work by the definition. Superannuation is generally designed to be preserved
After this point, the benefit ends, regardless of whether until you reach your preservation age and retire, but there
you’re back at work. are limited circumstances where early access is allowed.
Some policies offer shorter benefit periods, such as two One pathway is through severe financial hardship, where
or five years, which usually reduces premiums but can leave you may be able to withdraw some of your balance if you’ve
you financially exposed if you suffer a long-term illness or been receiving eligible government income support for an
injury. Longer benefit periods, like to age 65, provide greater extended period. Another pathway is on compassionate
protection but come at a higher cost. The right balance grounds, such as needing funds to pay for certain medical
depends on your financial situation and retirement timeline. treatment, palliative care, or to prevent foreclosure on your
Your financial adviser can help ensure your policy settings home. There are also provisions for permanent incapacity
give you the cover you need. or terminal illness, which can allow full access to your super
earlier than usual.
Question 2: While these options provide flexibility in difficult times,
I’ve heard there are rules around how much you can give they can have long-term consequences. Accessing your
away to your children before it affects your Age Pension. super early reduces the amount you have invested for
How do gifting rules actually work? retirement and may limit your future income. The eligibility
Centrelink has rules in place to prevent people from giv- rules can also be strict, and applications require evidence.
ing away assets simply to qualify for the Age Pension. Under A financial adviser can help you understand whether you
the current rules, you can give away up to $10,000 in a qualify, and the impact early release could have on your
single financial year, but no more than $30,000 over a rolling retirement plans.

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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