Insolvency Protection Insurance Australia
Personal insolvency in Australia shows a slight increase with each passing year. In fact, there were only 32,865 personal insolvencies in the country in 2008-09. This figure consisted of 25,970 bankruptcies, 6,718 debt agreements, and 277 personal insolvency agreements – Part X. The number of personal insolvencies rose by 5.6% in 2017-18 compared to the figures for 2017-16. That is where insolvency protection insurance in Australia comes in handy.
Bankruptcy And Life Insurance
Life insurance can help protect you against bankruptcy. People who are not able to pay their debts and those who cannot come into a suitable repayment agreement with creditors may petition an order to become bankrupt. On the other hand, a creditor can also apply to make an individual bankrupt if they are in a position to prove that the individual owes them money above a minimum amount. Although bankruptcy may last for three years under normal conditions, there are exceptions that could help prolong this period. Fortunately, life insurance – whether inside or outside of super – can protect the individual against bankruptcy. In fact, Section 116(1) of the Bankruptcy Act 1966 states that:
. All property belonging to a bankrupt at the commencement of the bankruptcy or:
. All property that has been acquired by the individual after the commencement of the bankruptcy and before his or her discharge is the property that could be divisible amongst the creditors.
The definition of property includes life insurance policies and their proceeds. That is why you should obtain life insurance from a reputable and experienced insurance provider.
Who Is At Risk Of Bankruptcy?
An individual who cannot pay his or her debts or cannot come into a suitable repayment agreement with the creditor is at the risk of bankruptcy. Even though no individual is immune to bankruptcy, self-employed individuals, company directors, and at-risk professionals (such as doctors, architects, accountants, lawyers, dentists, and engineers) are vulnerable to lawsuits from frustrated clients, patients, and business partners. In fact, successful lawsuits against these people may send them bankrupt.
Section 116(2) of the Bankruptcy Act excludes the following:
. The bankrupt individual’s interest in a regulated superannuation fund.
. The interest in an approved deposit fund.
. The interest in a public sector superannuation scheme – exempt.
. A payment received by the bankrupt from a superannuation fund – received on or after the date of bankruptcy.
This Act also excludes the amount of money that the bankrupt individual is holding in a Retirement Savings Account (RSA). These provisions will allow the bankruptcy trustees to recover any superannuation contributions that were made before the bankruptcy. That way a superannuation policy is a great way to protect an individual from the effects of bankruptcy. That is why you should invest in a superannuation policy without delay. We are one of the best insurance providers in Australia – with offices across the country – to purchase a superannuation policy.
Ordinary Life Insurance Policies
As mentioned earlier, a life insurance policy can protect an individual against a bankruptcy. The most common life policy in Australia is a term life policy and a trauma policy as a rider to the term policy. In fact, these policies are not actually property divisible amongst the creditors of a bankrupt. In case the proceeds of such policies come on or after the date of bankruptcy, the proceeds cannot be divided amongst the creditors of the bankrupt individual. In fact, these proceeds would go to the bankrupt policy owner or his nominated beneficiary. That is why you should also consider investing in a life insurance policy. We can help you select the best policy to suit your needs and budget.
Why Choose Us?
Insolvency protection insurance is an important cover to protect you against bankruptcy. Make sure that you buy such a policy from a reputable and experienced insurance provider. Do your research before choosing the right provider on the market. The policy should suit your needs and budget.
If you are interested in Insolvency Protection Insurance or any other insurance requirement, we can assist you in tailoring your policy to match up to your budget and your specific needs. For an obligation-free, competitive quote, professional insurance advice or more information on how we can help you find the best Insolvency Protection Insurance solution, please contact one of our expert consultants today!