Most people are aware of the importance of life insurance and many also have health and extras cover. But while its common to insure the house and car, most people are less familiar in their knowledge of income protection insurance.
An income protection policy is a tax-deductible insurance product designed to replace your income in circumstances where you are not able to work due to illness or injury. It will cover you until you are able to work again, retire, or die, whichever comes first. It is a vital part of an overall risk plan and strategy – no matter what age you are, if you are working and earning an income,income protection is essential for your financial security.
Income protection insurance typically covers 50-85% of your income and pays according to the benefit period and waiting period chosen. A good income protection policy can help you pay for all your expenses and sustain your lifestyle even if you are not able to work.
Here’s why income protection cover is must-have for anyone who is working, regardless of their age:
Insuring Your Million-Dollar Asset
No doubt, for most people, their valuable asset is the ability to earn income. Not everyone has a huge assets and savings to sustain their standard of living if they don’t have income.
According to research, average professional after-tax earnings is estimated to be over $3 million from age 25 to 60, which inevitably means income is an extremely valuable asset for people of all ages.
An interesting fact is that the majority of people insure the car, house, and other assets, but significantly fewer people insure their income. Consider this – if an uninsured vehicle is badly damaged, it may take a year to recover financially, but if you lost your income for an extended period, you might never fully recover from such a loss!
Don’t Gamble – the Consequences are Huge
While the likelihood of losing the ability to earn an income for a long period of time seems low, the financial impact of it happening is significant. Income protection protects you from this risk.For example, if you broke your hand and couldn’t work for a month, you could recover financially if you had leave or some savings in hand. But if you became seriously ill or had an accident and couldn’t work for more than a year, then those savings would disappear quickly.
While we don’t have to be overly concerned about short-term incapacity, the consequences of long-termin capacity can bring an abrupt end to the lifestyle you once took for granted!
Income Protection Helps You Re-Gain Your Lifestyle
Being unable to work for an extended period can cause severe long-term financial and emotional effects. You may have to sell the family home, change your children’s schools, take out high-interest loans,or even declare bankruptcy.
Are you willing to gamble on your future security? It can take many years to recover from spiralling debt, if ever. By investing in a tax-deductible income protection policy, you are not only ensuring the financial and emotional security of your family, but also maximising the possibility of recovering sooner from both your health and financial issues.