Your income is the foundation upon which your family’s financial plans are built and in most people’s lives there won’t be a larger asset to protect than their cumulative income. Consider this – a 30-year-old man currently earning $120,000 per annum with salary increases of 5% each consecutive year will earn over 11 1/2 million dollars by the time he turns 65. When it’s put that way your income is certainly worth insuring!
Life has a habit of throwing up hurdles, usually at the most inconvenient times. It’s impossible to know what’s going to happen in your life but insuring against potential problems reduces the risk that you may not achieve your goals.
Basically, to achieve your life plans you need to maintain your cash flow, so what happens if it should suddenly stop? Income protection insurance will replace 75% of your income if you can’t work due to accident or sickness and it is also tax-deductible.
It isn’t a replacement for workers’ compensation, sick leave or private health insurance. It is a long-term solution that should be tailored to work in concert with these and other insurance types.
Could this be you?
Matt was a 30-year-old doctor who fractured his wrist in three places and lacerated the tendon and nerves in his primary hand when he fell off a trampoline playing with his son. His financial circumstances were:
- Rent $3,000 per month
- Child maintenance payments of $750 per month
- Children’s school fees $500 per month (paid annually and due shortly)
- General living expenses (food, electricity, petrol, etc) $3,000 per month
- Car repayments $2,000 per month
Due to the severity of the break, Matt was off work for ten months. The accident cost him more than $100,000 in lost income and all of his savings. He borrowed from his ageing father to cover shortfalls such as school fees and rent. After his recovery, Mark found it difficult to work as a doctor because his injury affected his ability to perform the fine motor skills required in the interventional and surgical work in his occupation.
If Matt had income protection insurance with the appropriate conditions and terms he would have been able to recuperate without the stress of huge financial pressures. Additionally he may have received ongoing partial income if he decided to retrained for another career if he was never going to perform his previous occupation ever again.
Consider your own circumstances in the event of misfortune and ask yourself honestly – how would my situation unfold? Then discuss your current protection and possible strategies with us.
I look forward to talking with you soon
Director / Financial Planner
Specialist Wealth Group