Most people are covered by some sort of insurance, whether that’s for your car, health or home. But one type of insurance that many people forget – or are unsure if they need – is income protection.
Everyday living is expensive – there’s bills, food, rent and mortgages.
But can you imagine how stressful it would be to afford your living expenses if you had no income?
Unfortunately, this is the reality for 60% of Australians who will have to take a prolonged break from work at some point in their lives – whether that be for injury or illness 1
So how can you secure your finances in times when you need stability the most?
Insurance policies are an important part of your life. Now, many may think that they already have all types of insurance that they need to remain secure for the rest of their lives.
Unfortunately, many don’t consider personal financial planning related to the protection of their income. Most people do not even think about scenarios where they are too injured or too sick to work. For these reasons and more, it can be wise to consider if you need income protection insurance.
This is where income protection can be crucial.
What Is Income Protection?
Income protection is a type of life insurance that covers the base income of an individual when they are unable to work due to illness or injury. This means that in the event that you cannot work, income insurance can cover up to 70% of your regular working income to support you financially.
The total coverage and limit may depend on where you get your income protection from. Some insurance policies may also include other benefits, depending on the premiums you choose to pay for.
Why Should I Get Income Protection?
If you think about it, just losing your income, even for a month, would affect many aspects of your life. The sudden loss of income can cause you to fall behind on bills or rent.
Income protection can be important to consider if your goal is to be financially independent and secure for your future.
You may like to consider income protection if you:
- have a partner or children that rely on the income you earn, especially if you are the primary income earner in your family;
- are self-employed or a small business owner, as you may not have leave benefits to rely on
- have debt payments you need to pay – such as a mortgage or a car loan. You’ll need to make payments even if you’re unable to work.
It can also be helpful to look at when people decide to take out income protection and other life insurance covers. Check out our article which covers the common life stages that people take out life insurance.
What Are the Benefits of Income Protection?
Aside from continuing to receive a portion of your income when the situation arises that you cannot work, there are other benefits. As mentioned, some insurance plans offer other benefits, including:
- Plan flexibility depending on your needs
- Tax-deductible premiums
- You may also be able to purchase income protection through your superannuation fund
Make sure to ask your financial advisor for other benefits that you can receive from your insurance policies. These benefits may end up becoming useful later on in situations that you will not see coming.
How Much Does Income Protection Cost?
The cost of your income protection insurance premiums will depend on many factors and the policy you choose. You must also consider your needs and circumstances to know what additional benefits you may require.
While income protection insurance can seem expensive, a financial planner can support you to analyse the cost to benefit ratio of your personal situation.
To ensure you get the most appropriate policy with adequate protection for the right price, speak with a financial advisor before getting income protection insurance.
Keep Yourself And Your Loved Ones Safe with Income Protection Insurance
While we always hope for the best and maintain a positive outlook, there are many things in life we cannot control. So, we should be prepared for the worst-case scenarios in life.
Income protection may seem like a large expense now, it can be a life-saver when you need to rely on it.
Unsure if you need income protection? Speak with a financial advisor on the Gold Coast today for all your financial planning needs! From retirement planning to investments – we have it all covered.
Contact Cambio Group and make sure that you maximise your financial capabilities for a better future.
Disclaimer: The information (including taxation) in this website does not consider your personal circumstances and is of a general nature only – unless otherwise stated. You should not act on the information provided without first obtaining professional advice specific to your circumstances.
1“Life protection solutions: How they fit together – to cover you and those who depend on you”. Research from RI Advice Group Pty Ltd
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