The Importance of Protecting Your Income
How much sick leave have you accrued with your employer? If you were injured or ill and unable to work for longer than this, how long would you (and your family) be able to continue to meet your medical costs on top of your usual day to day living expenses without your employment income?
Employment income is typically the key to maintaining your current lifestyle, so protecting your ability to generate this income in the event of injury or illness is critical.
HOW DOES INCOME PROTECTION INSURANCE HELP?
The purpose of Income Protection insurance is to cover this potential income gap by providing up to 75% of your employment income on a monthly basis for a specified period of time (the ‘benefit period’), after you have been unable to work for a certain period (the ‘waiting period’).
BUT I THINK I’M ALREADY COVERED THROUGH MY SUPERANNUATION FUND…
You may already have an Income Protection insurance policy in place via ‘default cover’ through your industry / employer superannuation fund. Unfortunately, Income Protection insurance policies come in all shapes and sizes, and rarely does default cover suit an individual’s own personal circumstances.
WHAT SHAPES AND SIZES?
Considerations including the benefit type, benefit amount, premium structure, waiting period and benefit period are all levers that can be used to tailor an Income Protection insurance policy to your individual circumstances, while assisting in getting the cost / benefit balance right.
Determining whether to hold an Income Protection policy inside or outside of superannuation is another consideration. The cost can be tax deductible on your personal income tax return if the policy is held in your own name, but perhaps holding within your superannuation fund to help with cash flow would be more appropriate to your situation.
HOW CAN A FINANCIAL ADVISER HELP?
Getting the right advice around structuring an Income Protection insurance policy tailored to your personal circumstances will provide you with peace of mind that you have the right cover to ensure you won’t be financially stressed in the event your employment income is taken out of the equation should illness or injury strike.
Why not get in touch with us to discuss your own personal insurance needs?