Get out of Teaching

Season 2, Episode 9 Elizabeth interviews Chris Carlin (speaking on finances and income protection)

September 09, 2020 Elizabeth Diacos Season 2 Episode 9
Get out of Teaching
Season 2, Episode 9 Elizabeth interviews Chris Carlin (speaking on finances and income protection)
Show Notes Transcript

Chris Carlin, Financial Planner and Mortgage Broker from Master Your Money Now is today's guest.  Our conversation is focused on income protection, and Chris has some really helpful insights for teachers who may be out on sick leave or stress leave, as well as pearls of wisdom for early-career teachers. 

With over 9-years experience in the finance sector, Aussies from all around the country have trusted Chris to help plan their financial futures. 

Chris Carlin cares for the caring professions – teachers and nurses – helping you to shore up your financial resources so that you’ll be in a good position to leave, when you’re ready. If you are concerned about your financial future, go to masteryourmoneynow.com.au to book a free 30 min chat with Chris Carlin, and master YOUR money, now.

Elizabeth Diacos :

Welcome to Season 2 of the Get Out of Teaching Podcast presented by Larksong Enterprises. I'm your host, Elizabeth Diacos. In this season, we'll meet ex-teachers who have taken their hobbies and passions from outside of Education and created a new career for themselves. We'll talk to people who can support and inspire us as we make the transition and work on identifying the legacy we want to leave in the world. So come along for the ride as we get out of teaching. Episode 9. Hi, everyone and welcome to the show. On today's show, I've actually brought back a guest who I've had on the first season, Chris Carlin from Master Your Money, who is a financial advisor for teachers and nurses, actually. And Chris has been noticing that when, on the occasions when I suggest that someone speaks to him about their financial situation, before they make any more decisions about whether or not to leave Education, but actually get a handle on that financial situation, because that's often one of the biggest barriers to leaving, that Chris has just made some observations about some of the situations that these people are in. And we thought it would be really valuable to have a discussion around that. And so I just want to preface this conversation by saying that this is really general advice that that Chris will be giving today. And if you need specific advice, and you're in Australia, so he's targeting the Australian market, then please, you're welcome to get in touch with Chris but understand that the advice that we that he will give on the show today is of a general nature, and you would really need to make sure that you spoke to him directly if you had a specific concern. All right. So Chris, do you think I've covered that adequately?

Chris Carlin :

I think you've done a very good disclaimer there, Liz. That was fantastic.

Elizabeth Diacos :

Excellent. All right. So Chris, I've actually, when I talk to teachers, often one of the biggest hurdles for them leaving Education is financial security, because even if they're not happy in their job, they've got a regular pay packet coming in. And once you're in a role, particularly if you have an ongoing contract, it's actually quite hard to get rid of a teacher. And so they often will stay, perhaps after their best-before date, purely because of the security that it offers. And that's perfectly understandable, particularly in the current economic climate. But I know that you've noticed a few things about these commonalities among some of the people I've sent to talk to you. So can you share a little bit about your observations with us today?

Chris Carlin :

Yeah, so thank you for having me on the show again, Liz. And also thank you for those who have booked in for a complimentary chat to have a discussion about their situation. And for those who are listening who want to do that you can go to my website, masteryourmoneynow.com.au/getstarted, you can book in a chat and just mention that you're being referred from this podcast. So, I guess the themes that I'm seeing, and it's, I think, to preface it, the people that I'm seeing from this podcast are generally in their 50's. And what we're seeing - we're seeing a couple of things. We're seeing a couple of things that yeah, that are popping up. So the first one is at that 50 year old mark, it's really hard to, I don't want to use the phrase stuck, but it's definitely this feeling of that people are stuck in their situation and, and speaking to a couple of people the harsh realities is that they kind of are and simply because where they're at age 50 - they've got a maxed out mortgage, they've got a big car loan, they've got the credit card. They feel like they've been, you know, raising their kids, looking after them, you know, making a lot of sacrifices over the last 20/30 years, they lash out on these things which sound great for about three, they feel great for about six months, and then they realize, oh, I've actually got to pay all this money back. So for those who are thinking of taking on more debt, especially at age 50, be very careful because that is going to really limit your ability to make a transition in your career. And yep, it is going to make you - it's going to keep you from further and further off the hamster wheel. So debt can be a great tool, especially if you choose to invest in assets that are appreciating value such as property and shares, but if you're using, but it can be dangerous as well, and particularly if you've got debt on cars or credit cards.. Yeah, that's kind of like things really, really stressful for you. And if we add all that financial stress onto you being stuck in a job that you want to get out of, then that's a real concern. So that's definitely one thing I'm seeing.

Elizabeth Diacos :

I'm just going to throw in something there. I also because I, I guess I do talk to a lot of mainly women in their 50s.

Chris Carlin :

Yep.

Elizabeth Diacos :

That they may also be a carer for an aging parents. So the kids might be in their teen years, or perhaps young adults, but still needing some emotional and possibly financial support. But at the other end of the spectrum, they've got their elderly parents and I know we live with my father in law who's 92, and so I'm, you know, very aware of what that commitment entails. And so there's this added pressure that, just on their personal life, it makes it really hard to be open to change and also, it's hard even to downsize, maybe you can't downsize because you're living with your your kids or your elderly parents. And so some of the ways that you might consider making life a bit more manageable are kind of out of reach as well.

Chris Carlin :

Yeah, yep, definitely, particularly if the parents are not in I suppose, for lack of a better word, a good financial situation. And there is a financial requirement from the from the teachers that you're speaking to, to look after their parents - not only physically and emotionally but also financially as well. That's certainly a big commitment as well. So something to be mindful of there. So you've lead in probably to the second thing I'm seeing a fair bit of as well and you know, there is so much pressure both on, personally in the teaching profession as Education but just life as we know it with also, we've got COVID at the moment, we've got family pressures, retirement, and all this kind of things. And we know that what we're seeing and the discussions I'm having is we're talking a lot about making claims on personal insurance cover. I think that's something that we want to talk about a little bit more because most people are aware they've got some sort of insurance cover within their super (Australian Superannuation Accounts we're talking about here). They're just not aware how that works and what it looks like. So, within your - so generally within superannuation, you will have a default level of insurance cover. Now that default level of cover is a bare basics cover, we'll discuss how we can get better coverage in place later on. But usually there's going to be a bit of Life Insurance, pays out in the event if you were to pass away - covers the kids covers the spouse, yeah, looks after your family. There's also Income Protection which protects your income the event that you're unable to work temporarily or permanently due to injury or illness. And then there's Total and Permanent Disabled macabre, that's easy if you're unable to work or aren't able to ever return to work due to injury or illness. And we know for those last two for TPD, and Income Protection Cover, that the number one thing that teachers are going to make a claim for is mental health. So, we know a few a few of you that we've been speaking to a few people have been on income support because of, for mental health reasons. So I'm glad again that financial supports, but they're not aware that they could probably claim for total and permanent disablement covered too because

Elizabeth Diacos :

All right, so hang on, just let me stop you just for a second. So I do talk to a lot of teachers who are really stressed and overwhelmed by their job. And I mean, I know when I broke my wrist a couple of years ago, and I did actually go and look at my policy because the doctor said you can't drive for eight weeks, which basically meant I couldn't work. So I was actually, I had already left teaching, but I was still doing a bit of relief teaching. I did get a gig once at a school I could walk to, but that wasn't common. But yes, so it but it doesn't kick in until eight weeks. So I couldn't really claim it, because...

Chris Carlin :

Depends on the policy. So there what you're referring to there is what's known as the waiting period. That's the period of time between when you get injured and when the income protection kicks in. So usually it's either 30, 60, or 90 days. Depends on the policies, generally.

Elizabeth Diacos :

Well, my policy obviously sucks, because, 'cos I couldn't make a claim.

Chris Carlin :

Yeah, look, you get what you pay for. So I would say between a 30 day waiting period and a 90 day waiting period, the 30 day waiting period kicks in earlier, but it's probably going to be 50-100% more expensive.

Elizabeth Diacos :

Right, okay.

Chris Carlin :

And generally default cover is like I said it's a bare basic cover. So it's probably going to be that 60 to 90 day waiting period. So, which is unfortunate. So, yeah, and it is probably more designed for longer term injuries such as, for example, if that wrist injury was a leg injury, and you're out of work for six to 12 months.

Elizabeth Diacos :

Yeah.

Chris Carlin :

Or in this case, like I said, we've seen a lot due to mental health, where teachers just...

Elizabeth Diacos :

Yeah. So I wanted to just talk about that for a moment. So what I see is people who are really stressed, anxious, overwhelmed, and they, they don't want it so in Australia, you can access some support from it's provided by well, I'm not exactly sure who provides it. It's the government - if you're in a government school, you can access mental health support through the Education department. I think a lot of teachers are hesitant to do that because they're anxious or concern that that might not be confidential or it might be held against them. Or they might come across as vulnerable or weak. And so that impacts on their, the perception that other people have of them in the workplace. And so they might really wait until the situation is at crisis point before they seek any medical help, or any help from a counseling service. And so that's what I see a lot.

Chris Carlin :

Yep.

Elizabeth Diacos :

And when they finally do decide to get some help, and I totally understand why they don't because that was exactly the situation I was in. I did not get any help from a counselor that had anything to do with the school system, because I didn't trust that it was going to be confidential. I didn't want to take time off work to go to counseling session, because they would know and that would be like they would see me as weak and that I was already feeling in a tenuous position. And so in the end, I just quit. Right?

Chris Carlin :

Yeah.

Elizabeth Diacos :

But I know that you know, and I had backup, so I was really lucky, but not everyone's in that situation. So if they get to crisis point, they finally go see a doctor. The doctor says, "Oh, my gosh, you're you're, you know, you're really in a bad way. You need to take some time off work." Then what happens, Chris?

Chris Carlin :

Yes. So if it does get to that point where your doctor is saying, "You need to take some time off work," and it really sad to hear those kind of stories that lack of confidentiality, because that's a massive, massive no no, that's really...

Elizabeth Diacos :

I don't think it necessarily is, I think that was the perception that I held.

Chris Carlin :

Oh, perception, sure, yeah, yeah, but it's yeah, it's sad that is the perception, but there's plenty of other resources outside of the Education System that can definitely help. But yeah, when you go to yet, if your doctor will say, would generally say, "All right, we recommend you take three months off, six months off, 12 months off," whatever, "two years off," whatever that might be. Usually it's three to six months, and then they'll reassess. So yeah, I'd be saying "Can you, can you provide me a report, which I can take to my insurance provider in order to make a claim." So, yeah, if the first, if your waiting period is for example 60 days like yours was Liz, and your initial report says that you need to take 60 days of work, then yeah, it's probably not worth making a claim for but after 60 days, the doctor says, "Well, no you need another three, four months off," then your income protection can kick in. So that's where your income can be paid, partially covered, depends on your policy. Usually it's up to get the maximum you can cover 75% of your wage, but that will provide you with a bit of income, financial support, so you're not going to have to worry about the financial side of things. You're just worried about getting better.

Elizabeth Diacos :

Yes, so it takes the pressure off but I, again, because I talked to people in a situation quite regularly, then there's the anxiety of what happens when that runs out? It's a bit like now with the pandemic and we're all thinking about in Australia, we've got some support from the government, for job seekers, and also for people who didn't stay in their job. And we all know when it's going to run out and everyone's having a heart attack about, you know, the we're going to sort of fall off the economic cliff. So I think there's that concern that even when they started, they might have it for two years, they're already worried about what happens at the end of the two years.

Chris Carlin :

Yeah, yep. So there's two things you've mentioned there. So first one, what you've mentioned is what's known as the Benefit Period. And if you've got a default cover, the thing I would say is, yeah, most of the time, that is only a two year benefit period. So after two years, yes, it runs out.

Elizabeth Diacos :

So hang on, sorry Chris, the default cover is that just that comes with your superannuation?

Chris Carlin :

Correct! Yeah, yeah. So you haven't applied for it. You haven't gone through a medical check or anything like that. That's just your default insurance cover. Generally speaking, it's two years. Some providers pay up to age 65 as default cover, but often it's two years for default insurance.

Elizabeth Diacos :

Right, okay.

Chris Carlin :

Uhm, so but what after two years, you could probably look at Total and Permanent Disablement. So that will pay out a lump sum. Because after two years, there's probably a good case that you're probably not going to be in position to be able to return to the workforce. So that would definitely be a discussion I'd be having both with your doctor and also with a financial planner, superfund provider, whatever insurance provider, whatever that might be. So yeah, after that two years potentially runs out. Yeah, I would be looking at Total and Permanent Disablement cover as another option to provide some financial support.

Elizabeth Diacos :

Okay, so they might be able to do that. Is that a complicated process because or I'm thinking already This is not in my ballpark. Like I wasn't,

Chris Carlin :

Yeah.

Elizabeth Diacos :

The whole applying for stuff like that, that's a bit scary to me.

Chris Carlin :

So, yeah, so to apply for a claim there is a lot of paperwork involved, and especially with centerlink. And so, that's where you can engage my services, to be kind of like a mediator between the insurance provider and you. And so that's certainly something that's worth talking about there. It also depends a lot on the amount as well. So once you hit age 57-58, your default TPD cover might be only 10 grand. So in the eyes, that sounds like a bit of money, but in the eyes of an insurance, insurance provider, that's not that much. So they might not put up as much of a fight in comparison to well, if you've got a $2 million TPD policy, they're gonna be looking under a lot of, yeah, they're gonna be doing a lot of investigations for that. So...

Elizabeth Diacos :

To make sure you're not just trying to rip off the system.

Chris Carlin :

Correct! Yeah, yep. So look, I know there's a few horror stories but generally insurance providers are pretty good, complex and time consuming but generally pretty good to deal with. So that's all I can say, I would get a mediator, someone in a middle person involved so they can do a lot of that legwork on your behalf.

Elizabeth Diacos :

Right and so apart from someone like you who else provides that service, do you know?

Chris Carlin :

The other one would be a solicitor but you will be looking at significantly higher fees going through a solicitor.

Elizabeth Diacos :

Right. Okay. Yeah, got it. Okay, so, so say, you know, I'm in a situation where I've been out on on leave for two years, I've had Income Protection. It's clear to me that I'm not going to be able to go back to work because it's causing massive anxiety or I'm just really not fit for the role anymore. So what what's the next step, then?

Chris Carlin :

Yeah, so it will be speaking to your GP to see whether they would support your claim for Total and Permanent Disablement. And that's really important as well, it can't be because "I don't feel like it", it's going to be for medical reasons. And then, if they say yep, I support that, let's see how we go. Then it would be you contacting your insurance provider directly or doing it using my services or a mediator's services to get the paperwork, go through the process. The insurance provider will need to speak to your GP on your behalf to discuss their case in more detail. Authorities will be needing to sign for that. But then yep, once they do their due diligence, then they'll come back with a final outcome.

Elizabeth Diacos :

Right and so they just nominate "We're prepared to give you x dollars".

Chris Carlin :

It's an all or nothing thing. So if you've got a policy for $50 grand and they say you're totally permanently disabled, then they'll pay out $50 grand, if it's $500,000 they'll pay out $500,000.

Elizabeth Diacos :

I see. Okay, so it's not dependent on age, it's dependent on what the policy was.

Chris Carlin :

It depends on the policy was. Yeah, but with default cover, however, it decreases as you get older.

Elizabeth Diacos :

Oh... Right.

Chris Carlin :

So usually, yes. So usually say if you're 25-30 default cover would be maybe say $200,000-$300,000. But with a, when you hit aged, especially 55-60, because the premiums get really, really expensive once you hit age 50 what the default providers generally do is rather than increase your premiums, they decrease your cover.

Elizabeth Diacos :

Right. So in other words, if you're in your 50's...

Chris Carlin :

Yep.

Elizabeth Diacos :

That cover's really going to be virtually worthless by the time you're ready to retire?

Chris Carlin :

It, well, yes. Yep. But then again, if you are retired, then you don't need you can't claim for Total and Permanent Disblement.

Elizabeth Diacos :

And so, yeah, but if you were to say, say it was like three before retirement and you just couldn't cope anymore, you might get a small payout, but it's not going to be enough to cover very much at all.

Chris Carlin :

Again, it depends on your policy. Yeah, it really depends on your policy. And look, it might be $20/$10/$20/$30 grand. That's better than nothing.

Elizabeth Diacos :

Yeah. Okay. So it sounds like though, this default cover is (now I'm thinking about my own!), inadequate to the task, if you end up in a situation where you are, you know, permanently disabled either through a physical injury, or as you say, more commonly a mental health scenario.

Chris Carlin :

Yep.

Elizabeth Diacos :

So what advice would you give to someone who's say in their 30's just starting out, or 20s just starting out, what advice would you give to them because this default cover seems to be, you know...

Chris Carlin :

Yep.

Elizabeth Diacos :

It's skewed in the favor of the insurer.

Chris Carlin :

Yeah, look, it is. It's skewed in that - it is bare basic cover. And I suppose I've seen the other side of it as well where I know someone took out a $1.5 million loss and TPD cover in an industry super funded at age 50 was costing them $1500 bucks a year. They didn't track it. They looked at their super balance, why they came to me at 59 looking at their super balance, and I had to tell him that that policy that was costing him two grand a year wasn't decreasing in value. So still worth $1.5 million dollars. But the premiums on that were $14,000 a year.

Elizabeth Diacos :

Wow. And it was coming out of their super.

Chris Carlin :

Yeah. It's coming out of their super. So, you know, teacher in Australia earing $80-$100 grand a year, 9.5% of their salary was going to super so $8-$10 thousand a year was going to their super, this insurance was costing them 14. Their super was going backwards. Yeah, that really stuffed up their retirement. So yep, so be very mindful of that. But to answer your question in regards to, what would my advice be particularly to younger clients, and that - my first thing I would say is get, seek advice and get a proper policy in place because... a proper policy for a couple reasons. So, when you're young, let me put it this way. So, whenever you complete an insurance application or apply for, let's use the phrase proper cover, for lack of a better word, and you've got to go through a full medical questionnaire, and that's in regards to your, your health, your lifestyle habits, it's a pretty comprehensive questionnaire. And particularly because we're talking about mental health. If you've had, if you've seen a counselor or speaking to your GP about mental health or that fact you're a bit stressed at work, there is a good chance that this cover is not, is going to have what's known as an exclusion for it. So, so I'll use myself as an example like I took out cover at 28, I saw a counselor three years ago at 25, a couple of sessions just going through a bit of personal stuff. As a result, my insurance cover did not cover me for mental health. So the younger, if your people go to me at 25, and "Oh, I'm fit and healthy, I don't need insurance cover." No that's exactly the time you need to get insurance cover because once you get it, it's locked in. And yeah, it's whatever happens in the future, happens in the future. If you keep paying those premiums and keep that policy in place, you are going to be covered, and in this case for mental health. So that's the first thing I'd say. The second thing I'll say is, make sure when you have a policy, there's when you find it 100% in Super, you are significantly limited in regards to what you can and cannot claim for. So taking TPD for example, if it's held in Superannuation, the definition is - to make a successful claim - is if you're unable to work in ANY occupation. So you might be a teacher, you have been doing that for 30 years, and you can't work because of the stress and anxiety. But if you can still pick up a phone and work in the proverbial contact center, then that insurance policy might not pay out. Whereas if you held a little bit of cover outside of super, when I say a little bit of cover, maybe costing you $10/$20/$30 a month for that TPD policy, then the definition changes to own occupation. That means that you cannot work in the occupation that you've been trained for, in this case a teacher, then this pays out. So, I would always recommend I, without getting into too much detail just for the sake of time, but I for most of my clients, I'd recommend holding most of their cover inside super for the cash flow side of things, but then hold a little bit outside of super so it covers them for - makes it much more more likely to be able to make a claim. It can be paid monthly. It's just like a phone bill and just gives you that peace of mind and reassurance that you're significantly increasing your chances of making a successful claim.

Elizabeth Diacos :

So this is what - you're suggesting that for Total and Permanent Disability and anything else?

Chris Carlin :

Yeah, so well, there's four different kinds of life - four different kinds of personal insurance cover. So there's Life Insurance, TPD Insurance, Income Protection Insurance, and Trauma Cover, and holding them inside or outside of super really varies from, yeah, it's really a personal situation. So that's part of the discussion that I'd have with a potential client, understand your situation, understand your financial situation, your personal situation, and tailor a package that's best for you. So I guess that's the final bit of advice I can give. Insurance is complicated. Cheaper is definitely not always better. Make sure that there is a trade off between cost and benefits. Make sure you do this with the assistance of a financial advisor or specialist, insurance specialist who can guide you through those options.

Elizabeth Diacos :

Awesome. And I'm thinking, this would not just apply to Education, but also to Early Childhood Education as well, who are often quite young when they start, and that is also a pretty stressful environment.

Chris Carlin :

Yep, exactly. Right. Nurses as well. There's uhm, nurses are a little bit different. The phrase "nurse's back" is huge. Nurses are 5x more likely to retire due to a back injury than, than a normal occupation. So I think my wife who's a nurse, that's something we've got to manage for her. Again, the younger you can get proper insurance in place, the better off over the long term you're going to be.

Elizabeth Diacos :

Awesome. Chris Carlin, thank you so much for coming on the show again. It's been really fascinating hearing your perspective on this and I'm sure that people will be really interested to know this information. And if they want to get in touch with you, how do they do that again?

Chris Carlin :

Yeah, so you can go to masteryourmoneynow.com.au. You can find out more, I've got plenty of articles on there on not just insurance, but investing, super, Centrelink, whatever that might be. You can follow me on social media. I'm on Facebook, Instagram, LinkedIn, and YouTube. But also again, if you want to have a complimentary chat with me, you can go to my website, masteryourmoneynow.com.au. Go to the Get Started tab and you can book in a 30 minute complimentary chat with me. We can understand your situation, whether it's insurance or something else, have that chat and get go from there.

Elizabeth Diacos :

Right. So if you're an Aussie teacher, and you're a bit uncertain about what's next for you, that's definitely some something to consider. Chris Carlin, thanks so much for coming on the show today.

Chris Carlin :

Thank you very much, Liz.

Elizabeth Diacos :

You've been listening to the get out of teaching podcast presented by Larksong Enterprises with your host Elizabeth Diacos. Do you know someone else who could benefit from hearing more stories of hope and transition from teachers all around the world? Please take a moment to share this and other episodes via your podcast app. Each share helps me reach listeners, just like you, who can benefit from this content to get out of teaching podcasts is proud to be part of the Experts On Air Podcast Network. For show notes and other resources, please visit larksong.com.au/podcast