Is your biggest asset insured? (Hint: it’s not your home)
November 21, 2016
Pop quiz time: What is your biggest asset? Is it your yacht? Your house? Your prized tanzanite ring?
The truth is, your income is your biggest asset, as it funds all of these expenses, other investments and your cost of living.
Equally important is your health, as people cannot work and earn an income without good health.
For these reasons, it is imperative to protect yourself and your assets. How? With income protection insurance.
How does it work?
Income protection insurance offers you the peace of mind of knowing that if you become seriously ill or injured, you will be covered financially.
The policy will pay an ongoing monthly benefit, usually up to 75 per cent of your normal income, if you cannot work.
The benefit period will depend on the policy, but could range from one year, to five years or up to a certain age. Shorter benefit periods will incur a cheaper premium.
The waiting period, or the time before your policy starts paying a benefit, will also affect your premium. Waiting periods can range from 14 days to two years.
Your safety net
If you become seriously ill or incapacitated, the last thing you want is to be worrying about how to cover the bills. Income protection insurance allows you to remain in control of your finances and to continue to provide for your family.
It is particularly important for self-employed individuals, small business owners or those who are likely to run out of sick leave.
Having income protection in place means you can concentrate on what’s really important – getting better.
Income protection costs
The cost depends on the policy and your circumstances, including age, gender, whether you’re a smoker, health, job, income and recreational pursuits.
As an example, a 31-year-old, non-smoker, office worker earning $80,000 a year and needing $5,000 a month cover would pay less than $35 a fortnight for income protection. That’s cheaper than your daily coffee, and premiums are generally 100 per cent tax deductible.
Based on the above scenario, here are some examples of what’s available:
- Asteron Life ($75.94 per month)
- BT Life ($67.69 per month)
- OnePath ($67.84 per month)
What are the chances of suffering an event?
The phrase “it’s not going to happen to me” is fraught with danger. Life is inherently filled with uncertainty and no one plans to have a major accident or discover they’ve been diagnosed with a serious illness (physical or mental).
Of the Australian working population, 1 in 3 are expected to suffer a disability from the age of 35 to 65 which causes a loss of 3 months or more from work.
It’s better to err on the side of caution and take out income protection than risk an unforeseen mishap, no matter how unlikely you think it might be.
Curious to know more about income protection insurance?
To find out more about income protection insurance, please contact LDB on (03) 9875 2900 or fill out the contact form below.