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Protect yourself and your family with Income Protection Insurance
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Latest  /  Retirement / Super / Insurance

Protect yourself and your family with Income Protection Insurance

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4 benefits of a Self Managed Super Fund

When it comes to thinking of their assets most people will list the usual things: car, home, contents, shares and maybe some collectibles. Of course it’s prudent to insure those assets and most people do. But not many people think of their income as an asset, let alone insure it. In fact, only 2% of Australians have income protection insurance. Think back to your last pay, where did it go? Mortgage repayments, bills, credit card repayments, rent, or maybe you’re putting some money away for a trip to Europe. Would you have spent it the same way if you knew it was your last pay for 12 months? How long would your family be comfortable without your salary?

Nobody expects to suffer a serious injury, but close to 50% of all Australians will suffer a serious injury at some point during their lives. This is where income protection insurance can be the difference between focusing on your injury and getting better, and stressing about your situation and compromising your recovery. Income protection insurance has a multitude of benefits and your local financial adviser will be able to discuss in more detail how income protection insurance can help you.

Stay on top of expenses without your regular income

We all know life doesn't always run to script and there's no rewind button so you need to be prepared for unexpected hurdles. When you get sick the bills don’t stop. In fact, in many situations, they only increase. Do you know how much regular income you would need to service your debts over a long period of time if you were unable to work? Adding up all the bills, taxes, interest and fees is a daunting task, one that your local financial adviser will be able to guide you through. Most income protection products allow for an agreed value or up to 75% of your salary to be paid during sickness, but the amount you and your family require to remain comfortable can depend on a number of factors. The support during this time is priceless.

Insurance premiums could be tax deductible

The ATO allows deductions against premiums taken out separate to an insurance policy contained in a superannuation account. This means that in most cases you will actually receive a refund for protecting your own income as long as it’s outside your super. In addition, you can pay for up to 12 months’ of premiums in the future in order to claim deduction in the current financial year.

Income protection can help you care for a sick child

One of a parent’s worst fears is having their child suffer a serious injury or illness, with most families not in a position to have a primary earner take an indefinite amount of time off work to care for them. Financial assistance from the Government is barely enough to cover the most basic of expenses and because the parent is still healthy, there is no possibility to claim against other insurance policies. Your financial adviser can discuss the opportunities to customise your level of protection to include Family Care Cover, removing the stress of finances during a difficult period.

Your income could be the biggest asset in your portfolio. A 40 year old earning $100,000 per year will earn around $2,000,000 cumulatively after tax (without inflation adjustments) in the years leading up to 65. However you look at it, that’s a rather large asset. Could you afford to lose your income for an extended period of time? Are you confident that your family would be able to maintain their standard of living if one or two primary earner’s salary were to stop suddenly? Our financial advisers can review your situation with you to identify possible areas of risk and recommend protection strategies to ensure you and your family’s future financial health.