I'm a 40 year old single female (one 16 year old child) who has just been medically retired and have an ongoing compensable claim through Comcare. I don't plan on suing for common law, but will apply for permanent incapacity. I have a 300k mortgage and only $120k in super. My mortgage is now extremely hard to pay due to the compensation payments not being as much as my salary was. I have been told I will pay approximately 40k in taxes to get my super early. But I need to lower my mortgage payments. Is there any other way around this? I don't have perm incapacity insurance with my super fund (Hesta). I'm not entitled to any Centrelink payments either.
Top answer provided by:
Scott Malcolm
Hi Suzi
It sounds like you have had a lot going on in life at the moment. Clients of mine who have been through the Comcare claims process have commented it is often not a smooth one. Hope you are holding together okay and have a good support team around you.
Unfortunately your situation is a great lesson for others around why having an appropriate back up plan in place is important. There is never be enough money if the worst happens but it is about having some level of choice. Holding insurance policies for total permanent disability and income protection can provide a source of asset or income if the worst happens. Having your Wills and Enduring Power of Attorney in place builds a strategy to navigate these risks in life.
My suggestion would be to ensure you stay on the front foot with your mortgage provider and keep them informed of your situation. If you can speak to them about options to stop or reduce your repayments in the short term this will give you time to take stock to build a framework to move forward with things.
If keeping your home is important to you, it will be all about mapping out what is possible and realistic based on your future capacity for income and debt reduction. Have a think about what other options you may have in life to generate income in the background to help supplement things. Using the collaborative economy through ‘Uber’ or ‘AirBnB’ could help in the short term.
Superannuation can only be accesses once you trigger a ‘condition of release’. As you mention 'permanent incapacity' is one of those events which allow you access to your super benefits if you meet the requirements.
There is a funky tax calculation which your super fund will do based on service years and potential age to retirement which provides an increased ‘tax free element’. Based on your age, as you are under preservation age, there will be tax payable. I always suggest you get a second opinion on the tax calculation just to check this is correct. Based on your current mortgage, every dollar will count!
You have mentioned a super fund with HESTA. I would also suggest you check out the super seeker feature at www.my.gov.au. You may have some lost super accounts with some basic insurance cover in place. Either may help to boost your asset position.
In a situation like yours it is always my suggestion that you check eligibility for Centrelink Payments. You should also check any services or funding you could receive via the National Disability Insurance Scheme (NDIS), again pending any eligibility requirements.
Make sure you have the right support team around you. Getting quality advice is all about giving yourself as much choice as possible and unpacking the things you don’t know which may be available. The one guarantee in life is unfortunately things will happen that are outside of our control!
Scott Malcolm has been awarded the internationally recognised Certified Financial Planner designation from the Financial Planning Association of Australia and is Director of Money Mechanics. Money Mechanics is a fee for service financial advice firm who partner with clients in Melbourne, Canberra and Sydney to achieve their life and wealth outcomes. We are authorised to provide financial advice through PATRON Financial Advice AFSL 307379.
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Comments6
"This is to "Go Hard" above. As a long time adviser, but not acquainted with Scott who provided the answer here, your remarks are harsh in the extreme. I saw no evidence of "sanctimony", nor did I see that Scott needed an "empathy injection". As for "this is certainly not the place for 'tawd(r)y' ideological arguments", I don't see any evidence of that at all. Perhaps what might account for your extraordinary attack on a man who offers pro bono advice here is that you got out of bed on the wrong side. Uncalled for, unkind and unnecessary. "
Paul Herring 15:16 on 08 Sep 17
"Hi "B". I'm not sure why your 'thorough' answer to "A's" simple query needed to include rhetoric like "too many people fall into the trap of thinking there is some government bucket of cash that will save you". Your response laced with such sanctimony indicates that you need an empathy injection. You know nothing about the circumstances around Suzi's particular situation and this is certainly not the place for tawdy ideological arguments. If your trying to encourage people to get insurance, your superior sounding pomposity is a horrible sales technique."
Go Hard 17:11 on 21 Jul 17
"Hello A, this isnt what the NDIS was designed for, which is why it was very unfortunate that the previous government included the word 'insurance' in the name. The NDIS may be an avenue to provide Suzi with medical aids to assist with her incapacity and possibly some assistance with some physical therapy. That's pretty much it. However, the NDIS does not provide any form of lump sum to assist with clearing the mortgage and helping to retain her home. It doesnt provide an ongoing income to cover mortgage payments, running a car, feeding you and your family, or any of the multitude of other expenses that we incur on a daily basis. Many people complain about the cost of insurance premiums but fail to realise that the premium isnt the problem, its the solution to circumstances like Suzi's. Imagine how much better her situation would be if she had had $500K in life & TPD cover to clear the debt and have some left over her medical expenses, while also getting 75% of her gross income every month, until she waited for a verdict on her Comcare claim. I know which position i'd rather be in. Unfortunately too many people fall into the trap of thinking there is some government bucket of cash that will save you. There isnt. And they mistake things like Medicare and the NDIS as the solutions to their problems. They arent. Much better to take some control, take responsibility for your outcomes and spend a little on cover for you and your family. You're worth it. "
B 13:57 on 21 Jul 17
"Suzi, a support team is one of the most important points that Scott raises. I hope you have this. Not all is lost; take stock of life, and take this as an opportunity to re-prioritise and look at what is very important to you in the short, medium and long term. If I can add value at all, I echo the words of Scott in that you may be eligible to something from Centrelink; please speak to an FIS officer at Centrelink in relation to your situation. Best wishes."
Michael 13:11 on 21 Jul 17
"Isn't this what the NDIS is designed for?"
A 12:52 on 21 Jul 17
"This sounds like a really hard situation for you Suzi. I hope you can work things out. It serves as a timely reminder for everyone that the worst can sometimes happen, and this is exactly what insurance is for. I wonder how many advisers out there come up against resistance to this type of insurance when they mention it to their customers. I don't know anyone apart from myself who has income protection insurance. My guess is that the people who need it most are the ones who don't have it?"
David Kay 12:39 on 21 Jul 17