Protecting Your Greatest Asset With Income Protection
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Is your greatest asset at risk? Better yet, what is your greatest asset? You may think it's your house. Wrong! Although Australians may spend approximately 30% of pre-tax income on home ownership, an individual's greatest asset is their ability to earn an income, thus showing the importance of having adequate income protection insurance, one of the best types of asset protection.
How is income an asset?
Without income or cash flow, what will happen to your lifestyle? You can have the best savings plan. Your house may be mortgage free. You feel either your job is secure or you have an extremely marketable skill. Life looks grand! However, what happens if you are injured or incapacitated and are unable to earn income?
Doing the math
Over a working life of say age 25 to 65, if an individual earns an average of $30,000 per year, their accumulated income will be $1,200,000. Do the math for your own projected income. Think about how much income you would lose if you were suddenly unable to keep earning.
Asset protection with income cover
If you have done the rough calculation above and know that you can replace that income through other means, stop reading. If you are unsure if you can replace that income, you had best read on.
Accidents do happen, even if we believe it is only to other people. Research shows that serious injury or illness could put you out of the workforce overnight and with no pay. What's more, statistics show the average duration of a long-term disability is at least three months (Source: Australian Bureau of Statistics 1989-90 National Health Survey). Imagine being off work for that long and not being able to provide for your family, pay the mortgage or any of your regular expenses.
Another fact is that it costs money to be alive and more money if you need special care. If you have not already done so, you best take stock and figure out what measures you have in place and where you might have assumed risk without knowing it.
What happens if I change jobs?
Remember not to take group plan coverage for granted and don't take it as an absolute. In today's economy, some will find themselves moving from a large organisation to a smaller one or maybe to a self-employed situation.
Income replacement is often the last things on one's mind during times of change. Salary negotiation is a perfect time to find out about coverage, exclusions and to adjust your expected income. It should reflect the cost of individual plans if required. Now is the time to assess your needs in terms of your protection.
Before you make any decisions on purchasing coverage, be sure you understand all the ins and outs. Whenever you are dealing with an income protection insurance product, be sure you are complete and truthful in providing health and lifestyle information. Be certain to obtain, in writing, any offers or assurances of coverage, especially when it comes to pre-existing or exclusions coverage. Understand what you are buying - it is your right!
Asset protection insurance planning
You, your family and the future all depend on cash flow. There are several different methods and tools to determine cash flow requirements and the best tools will allow for "what if" scenarios. The important part here is that you do the planning and put thought to this task immediately.
Yes, the information and work required in completing an assessment is very similar to the requirements in determining life insurance needs. Understand, when discussing income cover with your adviser, that it does make sense to do a life insurance check-up at the same time.
Security is yours for the taking
One thing that is true about insurability is that you will never be more insurable than you are right now. Oops, did you hear that moment swoosh by? You are now less insurable then when you started this paragraph. Such is the nature of risk. A life can change in the blink of an eye; a mere moment or a heartbeat. Be certain that you and your loved ones always have cash flow get income protection insurance. You cannot afford not to.
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Disability and insurance varies depending on the definition, which in turn can affect your claims payment
Insurance for women is more tailored as income protection companies now offer specific benefits for women such as pregnancy premium waivers, part time work cover
Income protection premiums for women are different to men based on historical, health & probablity to claim factors