Question 1

I am considering getting Trauma cover for myself however I am unsure on what is the difference between standalone and linked trauma cover. What is the difference?

Standalone trauma cover operates independently, offering a comprehensive insurance policy that provides a lump-sum payment when you are diagnosed with a specified critical illness or medical condition covered by the policy. This type of policy is not linked to any other insurance products and ensures that the policyholder receives the full benefit amount without any deductions from other policies.
In contrast, trauma linked cover is a policy that is tied to another insurance product, such as life insurance and/ or total and permanent disability (TPD) insurance. While it also offers a lump-sum payment for critical illness diagnosis, the benefit amount is linked to the benefits provided by the primary insurance policy. For example, if trauma linked cover is linked to your life insurance policy, any payouts for critical illness would typically be deducted from the total benefit amount payable under your life insurance policy. It is important that you see a financial adviser to determine which of the two is most appropriate to your current circumstances.

Question 2

I’ve been told that if I sell my shares, I might have to pay capital gains tax (CGT) if I incur a capital gain from the sale. What is a capital gain?

A capital gain refers to the profit earned from the sale or disposal of certain capital assets, such as real estate, shares, managed funds, collectibles, and other investments. When you sell or dispose of an asset for more than its cost base (or adjusted cost base), you realise a capital gain.

The calculation of a capital gain involves subtracting the asset’s cost base (or adjusted cost base) from the proceeds of the sale or disposal. The cost base typically includes the original purchase price of the asset, as well as certain acquisition and disposal costs, such as stamp duty, legal fees, and brokerage fees.
Before you sell any investments, you should seek advice from your financial adviser so that you can consider the tax and other transaction costs involved.

Question 3

A lot of people online say that I should invest in index funds. What is an index and what does it have to do with index funds?

An index refers to a specific benchmark or reference point of a particular market, sector, asset class or investment strategy. Index funds are investment funds designed to mirror the performance of a particular index by holding a portfolio of securities that closely mirrors the composition of that index.
Indexes used by index funds can represent various segments of the financial markets, such as broad market indexes, sector indexes, regional indexes, or specific asset class indexes. These indexes serve as the foundation for constructing the investment portfolio of the index fund, guiding the selection and weighting of the securities held within the fund.
It is important that you meet with your financial adviser to determine what investments are appropriate to your specific needs and circumstances.

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