Most of us spend a good deal of time, money and effort on acquiring assets to improve our lifestyle, but how much energy do we really invest in protecting them?
How well do you take care of your personal and financial information? Do you have adequate safeguards in place for yourself and your family in case hardship or tragedy occurs? You never know what is around the corner and it pays to be prepared for anything that may arise.
This guide offers you some simple and sensible steps to help you to protect your assets, and your personal and financial information, against threat.
WHY PROTECTION NOW IS MORE VITAL THAN EVER?
The launch of the ‘world wide web’ and its electronic environment for banking purposes has offered customers enormous benefits like never before in terms of convenience and time. It empowers you to manage your accounts from any location, and to make payments at all hours of the day.
Sadly it can also present a significant threat, as the internet is a haven for malicious and fraudulent activity. This is why protection for yourself and your assets has become more crucial than ever before.
When you think about protecting your interests, you usually think of insuring assets such as your home or car. These are physical things that are fairly easy to put a value on. However, it is also important to take care of your intangible assets, such as your identity, income, health, life and finances.
Protecting these things are not only beneficial for you, but for your family too.
WHAT IS FRAUD?
Unfortunately, fraud is not a new concept. Fraud is where people use dishonest means, in different forms, to obtain a financial benefit.
There have always been people behaving this way, however, the types of fraud have become more elaborate, especially with the growing use of the online world.
It is vital to remain aware of the risks out there and to put some plans in place to ensure your protection.
WHAT IS IDENTITY THEFT?
Your identity is your key to accessing services, purchasing products and participating in the community. Your identity is valuable and that is why it is worth protecting.
Identity theft occurs when someone obtains your personal information and uses that information for their financial gain. It can be as simple as someone using your credit card to make purchases illegally, or as complex as someone assuming your full identity to conduct elaborate transactions such as opening bank accounts, taking out loans or carrying out illegal business activities.
The alarming element of identity theft is that all this can happen without your knowledge. By the time you find out about it, the damage to your financial situation or reputation or your credit rating may already be done.
There are a number of ways that a thief may get hold of your information, some of these are:
• Stealing your wallet
• Taking mail from your letterbox
• Going through your garbage
• Hacking your home computer/device
• By attaching a monitoring or skimming device to an ATM or EFTPOS machine
STEPS TO REDUCE YOUR RISK OF FRAUD AND IDENTITY THEFT
As hard as we may try, unfortunately we cannot stop everyone who decides to commit identity theft and fraud.
What we can do though is educate ourselves on some simple actions listed below to reduce the risk of it happening to us or someone we care about. Remember knowledge is power!
1) Create strong passwords and keep them safe - Passwords can be an effective security measure, provided that you use them properly. Some tips when choosing a password are:
• Do not choose a password that others can guess easily (such as your date of birth).
• Use different passwords for different accounts.
• Change your passwords regularly.
• Do not write it down or store passwords where they are likely to be found.
• Choose a combination of letters, numbers and characters for your password.
• The longer the password the better as it will be harder to decipher.
2) Safely destroy personal and financial information - Before you put any paperwork in your rubbish, make sure that you can tear up or cut up any personal information (or put it in a shredder) to ensure it can’t be used by thieves.
3) Guard your PIN - When using your pin, ensure that no-one standing close to you can see you entering the numbers. It is always a good idea to use your spare hand as a shield to cover the hand typing the number.
4) Secure your mailbox - If you are going away, put a lock on your mailbox or organise to have your mail collected by a trusted person until you return.
5) Check your accounts and statements regularly - Make a habit of checking your account transactions online. If you have nominated to receive your statements in the mail, go through them carefully. By doing this, you may spot unusual transactions and be able to stop identity theft or other fraud before it gets too serious.
6) Don’t share your personal information with people over the phone, on text message, over the internet, on email or in the traditional mail.
• If someone is calling you asking for information, ask them where they are calling from. Then hang up the phone, look up the phone number from their official website or the white/yellow pages and call them back. That way you know for certain it is genuine and you can feel safe to give information.
• If you receive a text from a number you do not know, do not click on any links and do not reply.
• If you receive an email, do not click any links or open any attachments. Also, do not reply.
• If there is a call from an unknown phone number, do not answer it.
• If there is a missed call and you do not know who it is, do not call it back. (If it is important, they will leave a message and if you know the person you can call them back).
7) Be vigilant and careful with who you are giving your credit card details to – If you are thinking of giving your credit card details out over the phone or online, do so with caution.
By Phone: If you choose to make a payment with your credit card directly to a business over the phone, be sure you know and trust the business.
Make sure it is you who called them, and that the merchant completes the transaction while you are on the phone and that they do not write it down anywhere to complete later.
Check there is no one in the room with you listening to you reading out the card details.
Via Internet: When choosing to pay for something online, make sure firstly that it is a legitimate business.
Look for ‘https’ in the web address and a locked padlock icon in the address bar.
Do not buy through links, go to websites directly for making purchases.
Make sure your virus protection is up to date.
It is advisable not to keep your credit card details saved, but rather enter it in each individual time.
Avoid Internet banking or making transactions from shared computers, (such as at Internet cafes or libraries), as your passwords, log-on details and other personal information may be inadvertently stored and accessed by others later.
PayPal: As a secure and quick way to make online purchases, another option you have is PayPal. You link an account or credit card to PayPal and then all your payments are made via them. This hides your details from the merchant, and also allows you to store your details for frequent use in a safe environment.
8) Protect your devices – The best way to protect your devices is by installing the latest protection software and ensure it is kept up to date. This software should protect your computer against viruses sent to you in files or that you may accidentally download from the internet. It can also protect you against spyware (which is a type of software that covertly steals your personal information without your knowledge. Spyware usually gains access to your computer through emails, even though you may not have even opened an attachment).
A firewall is also important to protect your computer while you are online and will stop unauthorised access.
9) Check your credit report regularly - Your credit report records your credit history and all applications for credit made in your name. You may be able to stop any unauthorised activity early if you keep an eye on this.
It is comforting to know that The ePayments Code regulates electronic payment transactions on your account. Examples include ATM, EFTPOS, BPay, Mobile and Internet Banking.
The ePayments Code says you are generally not liable for any unauthorised transactions on your account unless it can be shown you contributed to the loss. You may be considered to have contributed to the loss if you store your PIN or access method with your card.
COMMONLY USED HIGH-TECH FRAUD METHODS
With more and more financial transactions being carried out electronically, the regularity of hi-tech fraud has also increased and the activities have become more sophisticated.
Here are some examples of hi-tech fraud to be aware of and some actions you can take to protect yourself against it.
Skimming – This occurs when an unnoticeable device is attached to an ATM which captures your personal details from the magnetic strip on your access card.
Skimming can also occur when you hand over your credit card for payment, so do not let it out of your sight. (Be alert to this practice, even in reputable stores.)
Phishing – This refers to email, text or phone messages that appear to come from legitimate businesses or government departments and agencies, asking you to disclose personal details or access information to your accounts.
These emails often look authentic by using logos and even working links to the pages on legitimate websites.
Remember no reputable organisation will email, text or phone you asking for personal or financial information.
Be alert to anything that tells you to act quickly, often suggesting that your account will be closed down or you need to upgrade your security.
Under no circumstances should you click on the links or attachments in the email because they could contain dangerous viruses, in fact you should delete these emails from your system.
Malware – Malware (malicious software), is something that hackers fraudulently try to install on your network or device.
They gain unauthorised access to your system and use things like spyware, a virus or Trojan (all types of malware) to destroy or change information or to steal or obtain access to your personal information. This can often be hidden in attachments and links. Alternatively, they may just find you online.
Firewalls and a good antivirus/spyware software is critical in protecting you from this.
POPULAR SCAMMING TACTICS
There are many scams going around that will attempt to get you to part with your money. Some of them have been running for many years and are known around the world, and others are relatively new. However, they all have one thing in common, they manage to convince a great number of unsuspecting people.
Here are some common characteristics of illegal scams:
• They will offer you faster and bigger returns than other legitimate investments.
• There is a sense of urgency. The scammers want you to ‘act now’ or ‘sign now’ so that you do not miss out on the offer. (In reality, they just want you to sign up to their scheme before you have a chance to check them out and realise they are not legitimate).
• Often the scammer will tell you that the offer is exclusive, a secret deal and that you have been specially chosen to participate. This may be a prize, holiday or even the lottery.
• Scammers will go to a lot of trouble to make their scam look legitimate. They may use official looking logos, business names that sound reputable and present their documentation and information in a professional way.
• Sometimes the scam will come in the form of a threat. If you do not do this now you will be billed a large amount of money.
• You may notice some spelling errors in their emails, along with unusual email addresses.
• Sometimes the scam will come in the form of a threat. Perhaps they are billing you for a large amount of money for a product or service, and if you do not reply immediately, they will charge you. They are even known to mention the Government, ATO or threaten legal action to really scare you.
• They may act as a legitimate service. They can pretend to be the mail service and claim that you have to click on your text to see when the mail is arriving.
• Scammers will sometimes act as though they are working on behalf of a charity, offering you rebates and refunds to lure you in.
WELL KNOWN SCAMS TO WATCH OUT FOR
The following are some typical scams that are often replicated in various ways. The main thing to remember when protecting yourself against scams that if it seems too good to be true, it probably is.
Cold calling – scammers make cold calls offering to sell you financial products or investments. They will try to sell you expensive products or investments that do not deliver as promised.
Romance scams – You may meet someone online and think you are forming a romantic relationship. After a time together when you begin to trust them, they may start to ask you to send money or items.
Gaming scams – The online gaming industry is thriving, but unfortunately, this has gained the attention of cybercriminals. Through gaming, fraudsters use methods to obtain personal and financial information, while disguising it as a benefit in a game. (Perhaps offering a link or third party site that can advance you further in the game, which in fact puts a virus on your device).
Children can also be particularly vulnerable to this being that they are a big percentage of the online gaming community and may be unsuspecting to a fraudster’s intention. In chat areas of some games, they may even offer up passwords when asked.
Nigerian letter scam – a long-running scam where you receive a letter or email from a Government official or business group asking you to help transfer money, for which you will receive a large benefit. The catch is that you are required to pay all sorts of ‘advance fees’ (e.g. customs fees, taxes) to make the transfer possible and to share your account details. These fees are the real purpose of the scam and you are out of pocket
without ever seeing any of the ‘money’.
Lottery scam – another type of ‘advance fee’ scam where you receive a letter or email advising that you have won an international lottery. You are asked to pay a fee to process your ‘winnings’, but of course, there is no lottery and you are out of pocket.
Money transfer schemes – These schemes offer you a high percentage for filtering money through your bank account. You receive money into your bank account and transfer it out again, keeping your commission. These scams are set-up to launder money from proceeds of crime with you as the mule.
Pyramid schemes – this type of scam promises to make you loads of money and works by charging you to enter the scheme. You in turn have to find others who will pay to join and this goes on until the scheme runs out of new recruits and the pyramid collapses, with the originators long gone with your money.
Ponzi schemes – a simple scam that promises security and high returns on your investment. Scammers use funds to pay dividends to investors for a few months, so they feel comfortable enough to invest more money or encourage friends and family to join. After a period of time, the dividends dry up and your investment disappears.
KNOW YOUR ASSETS
The first step in protecting your assets is to know what you have. It is sometimes surprising to see how much your assets are worth when you add up their value.
It is a good idea to make a list of everything of importance that you own including your home, car, boat, furniture, electrical goods, appliances, computers, devices, jewellery, sporting equipment, tools, artwork and other collectibles.
Along with what each item is, include a brief description of it and record any other important features, such as model number or serial number.
When you have a clear idea of what you own, you can work out the best way to protect your assets.
PROTECTING YOUR ASSETS WITH INSURANCE
Although you might do everything possible to reduce the risk of loss or damage to your possessions, the unexpected may still happen despite your best efforts.
Insuring your assets is possibly the best way to protect them, giving you some peace of mind knowing that if the worst were to occur, you are covered financially.
Depending on the type of cover of your insurance policy, in the event of an asset being lost or damaged, the insurance company will provide you with some financial compensation.
Each insurance policy will have a set of listed events for which they will cover items if damaged due to theft, fire or storm. Some companies will even cover accidental damage.
If an item is low in value and the risk of loss or damage is minimal, you may decide the item is not worth insuring. But if the item is valuable and the cost of replacement would be high, you may decide that insurance is required.
THE INSURANCE PROCESS
When taking out insurance, it is good to do your research. You can make some calls or go online, even get some quotes.
Do not always go for the cheapest insurance available, go for the best value for money.
To check the value, you want to look for the best coverage for a competitive price. Always make sure when comparing the prices that you are doing so with the same excess amount for each to make a fair assessment. (Some companies may quote what seems like a very low premium, but they have listed the excess as extremely high in the event of a claim).
Questions you might use when trying to find the right policy for you. Ask the questions relevant to the type of insurance you are looking for. These may be questions like:
• What does the policy cover?
• What isn’t covered under the policy?
• Are you required to pay an excess on claims? If so, how much is the excess?
• How much is the premium? Can it be paid by the month?
• Are there any waiting periods?
• What is the claims process? How long does it generally take?
• Am I able to alter the benefit amount?
• What happens if I cancel the policy?
Duty of Disclosure - If you decide to buy insurance, you must fill in the insurance application honestly and completely. This may be done in person or verbally over the phone.
Your answers must be accurate and you must not leave anything out. This is called your “duty of disclosure”.
The insurer relies on the information you give them to assess the risks, which helps them decide whether or not they will provide insurance to you and if so then at what price. The information is usually only checked if you make a claim. If the information you provided is inaccurate or incomplete, even if it was unintentional, the insurer can challenge the claim and may even be able to void the policy or reduce their liability considerably.
Policy Document and PDS - When you commit to an insurance policy you will receive a policy document outlining all the details and a PDS. These documents must be written in language that is easily understood and they must be clear and straightforward.
Have a read through the document to confirm all the details are correct, as it is your responsibility to do so. Unfortunately, many people only read the policy document when it comes time to make a claim, but by then it is too late to change it if it is not right for your situation.
Premium - You will be required to pay a fee for the insurance, which is called a premium. The premium is set by the insurance company and is usually calculated by reference to a combination of factors, including the value of the asset and potential risks involved.
You might pay this in a lump sum or if it works better for your budget, most places will allow you to pay by the month.
Excess - An excess applies on your insurance policy when you make a claim. The excess is an amount you have to contribute towards the claim before the insurance company will make a claim payment.
The excess amount will be clearly stated in your policy documents and there may be more than one excess. For example, with car insurance, a standard excess may apply to every claim made and an age excess may also apply if the driver is under a specified age.
Sometimes your insurer will allow you to choose the excess on the policy. In general, the higher the excess, the lower the premium will be and vice versa.
Renewal - When your insurance is due to expire, your insurer will send you a renewal notice to remind you. It is important to review your insurance cover at this time and make sure that it is still sufficient for your needs.
Sometimes the premium amount will change at this time so be sure to check.
There are many different types of insurance to protect different kinds of assets.
The coverage of a policy and the cost can vary greatly between the different types of insurances and the insurers themselves, so shop around for the right insurance for you.
It is logical that when you think of insurance, the first thing that comes to mind is protecting assets such as your home or your car. They are physical things and are fairly easy to put a value on.
However, it is even more important to protect your intangible assets, such as your income, your health, your life and your finances, for your benefit and your family’s benefit.
Home Building Insurance
Home or building insurance covers you for damage to the building structure itself, garages, pergolas windows or anything that is fixed to the house.
The insurance policy you choose will outline a number of events you will be covered for.
Generally, there are two types of home building policies to choose from:
1. Defined or listed events policies; and
2. Accidental loss or damage policies.
The defined or listed events policy is most common for home insurance and provides a list of specified events that your insurance covers and those that are not covered.
An accidental loss or damage policy provides additional cover for almost any accidental loss or damage, unless your policy specifically excludes it. It provides a higher level of cover so offers more peace of mind, but it usually comes at a higher price.
When calculating the required insured value for your home, you may at first think that a few hundred thousand dollars will be enough to get your home back in shape after a disaster. But give some more thought to how much it would cost to rebuild your home entirely if it were totally destroyed by a fire or earthquake, including architect’s fees and removal of debris.
If you have a mortgage on your home, building insurance is likely to be a condition of your home loan. Usually your lender will be included on the policy to protect their interests.
Home contents insurance is designed to provide you with financial compensation to the contents of your home if an insured event occurs causing loss or damage.
Using the list of assets you have created will help you in estimating the total sum insured value to elect for of all your contents. Do not forget to include items such as curtains, carpets and rugs in your list.
It is also important to check the policy limit for each item of value, such as expensive jewellery, artwork or antiques. If the policy limit per item is not enough to cover the value of the item, you should consider purchasing additional cover for these items. It is a good idea to get a professional valuation and take photographs of these valuable items, which will assist with replacement should you make a claim.
Your car is another expensive asset, so it is sensible to protect it by insuring it. There are a few different types of car insurance, which vary in price according to their level of cover.
Compulsory Third Party (CTP) insurance – This is required in order to register your car. This insurance provides you cover if an accident caused by you causes serious injury or a fatality, however, it does not cover you for damage you cause to another person’s property, including other cars.
In most states, CTP insurance is automatically included with your registration and provided by only one insurer. However, in New South Wales and Queensland, there are a number of companies who offer this type of insurance. It pays to shop around because the premium can vary significantly.
Third Party Property – This is relatively inexpensive insurance as it only provides cover for damage that you do to another person’s car or property. It does not include cover for any damage to your car.
Third Party Fire & Theft – Provides the same cover as Third Party Property, plus additional cover if your vehicle is stolen or burnt.
Comprehensive – This insurance provides the most complete cover for you and your car, but is the most expensive of all the car insurance options. It provides cover for damage caused to your car and any damage you cause to other cars or property during an accident, even if the accident was your fault.
Comprehensive insurance will also cover you against theft.
If you borrow money to pay for your car then your lender will usually require you to comprehensively insure the car and the lender would be listed on the policy.
When you take out comprehensive insurance, you will elect whether you choose to insure for the market or agreed value. In the event that your car is declared a total loss (through damage or theft). That is what you will receive
Market value means the insurer pays you what it would cost to replace your vehicle with an identical vehicle, taking into consideration the age, condition and kilometres travelled. This tends to be the most popular choice as is the least expensive.
Agreed value is a fixed amount that your insurer agrees to pay you, including any options or modifications that the insurer has agreed to cover.
You may not think of your holiday as an asset, but if you’ve paid thousands of dollars in advance for a holiday, then you should be protected in case something goes wrong.
Levels of cover provided by travel insurance policies vary greatly depending on which policy you choose, so it is important to select the right level of cover for your destination.
Domestic Travel - With domestic travel, you may choose to cover cancellation and baggage. If your holiday is cancelled for any reason, you will get your money back, and if the unfortunate happens and your luggage is lost, you will receive compensation. (In Australia, you do not require medical insurance as you are already covered under the Medicare scheme.)
Overseas Travel and Cruises - With overseas travel and cruises (even domestic cruises) you may prefer to take out a greater level of cover that can protect you and your family not only against trip cancellations and baggage loss, but other unexpected events that may occur while you are on holidays, such as medical emergencies, or situations requiring legal assistance.
If you have any pre-existing medical conditions, you must inform the insurance provider. This could cause the insurance premium to be more expensive.
Private health insurance offers you peace of mind knowing that you are covered for medical treatment when you need it.
All Australians receive medical benefits under the Medicare scheme but private health insurance provides you with additional cover.
Some examples of the added benefits are listed below:
• Shorter waiting periods for elective (non life-threatening) surgery.
• Cover for accommodation in a private room or private hospital.
• Your choice of a doctor in a public or private hospital.
• Cover for a portion of other medical expenses such as dental, optical, chiropractic and physiotherapy.
Depending on your annual salary, there could also be tax benefits if you take out private health insurance.
Income Protection Insurance
Income protection insurance is designed to take care of you financially in the event you are unable to work due to illness or injury.
If you are unable to work for a long period of time, this insurance pays you a regular income, usually up to approximately 75% - 80% of your normal earnings.
If you are unable to work at all, you can choose a length of time you would receive payments for, however, the longer the benefit period, the higher your premium will be.
The premium is calculated on a number of factors, including age, gender, occupation, health and how long you are willing to wait before the benefit is paid.
Income protection insurance premiums are normally tax-deductible so be sure to check with your accountant.
Life insurance provides financial security for your family in the case of your death. The purpose of life insurance is to relieve your family from the burden of financial worries at such a difficult time.
If you are the main income earner in your family, life insurance provides you with peace of mind knowing that your family will be financially looked after if you died prematurely.
Even if you are not the main income earner, life insurance is still important for your surviving partner as they come to terms with the practicalities of life after your death.
Some policies may also provide extra benefits to policyholders, such as paying out a benefit to the person insured if they are diagnosed with a terminal illness before a certain age.
Check with your superannuation fund if they provide life insurance cover as part of the superannuation scheme. If it is offered, check carefully that the level of life insurance cover meets your needs, otherwise you may need to top up your life insurance cover.
Trauma and Permanent Disability insurance
This insurance protects you in cases of serious illness or disability. They are often available in conjunction with life insurance or can be purchased separately.
Benefits are normally paid to you in a lump sum, so that you can take care of financial commitments.
WE ARE HERE TO HELP
At Australian Mutual Bank Ltd, we are ready to help you!
For any questions about protecting yourself and your assets or any concerns about the safety of your personal information or finances, please contact our knowledgeable and friendly team.
For all your insurance needs, we can get you protected. Contact Us on 13 61 91.