The cornerstone of every great financial plan is a solid risk management strategy. Injury, illness and even legal challenges can derail the best structured plans.
It’s crazy to think that most of us have comprehensive car insurance, yet so few of us insure ourselves properly. If you start to earn income, have a family, take out a mortgage or even start a business, you’ll need a strategy to secure and protect your financial position. Income protection insurance is a key strategy in mitigating unforeseen events which can hamper your ability to earn an income.
Part of the problem is that a lot of people get confused by all of the different insurance products available, what they actually cover and the technical nuances that make different products worthwhile (or not).
This is especially the case with income protection insurance which is often held within superannuation policies. People often pay policy premiums for years, totally oblivious that a successful claim would be highly unlikely due to a technicality of how the policy is worded.
What you really need with an income protection policy is a product that will honour a legitimate claim and pay you up to 75% of your income (indexed to CPI plus 10% super contribution) if illness or injury prevents you from working.
This means you can keep up with mortgage repayments, pay your other ongoing bills and maintain your quality of life.
Income Protection Insurance policies held outside of superannuation can be tax deductible on your tax return as well.
Here is a real example of how income protection insurance has worked for one of my clients:
Brian (not his real name) contracted a virus that impacted his brain and resulted in minor brain damage. Unfortunately, this put an end to his medical career. Due to his wealth protection plan, he’s been receiving a monthly income for nearly 10 years. Currently the monthly amount he’s receiving from the insurer is $15K.
So as a basic starting point please make sure that you and your loved ones are looked after if anything goes wrong. For example, risk of cancer and stroke are statistically quite high in Australia. We can’t deny these facts and private medical insurance will often fall well short of what’s needed.
There are a range of options we can explore, including:
- Income Protection
- Total and Permanent Disability
- Business and Business Expense
To discuss the best income protection strategy for your individual requirements please don’t hesitate to get in touch by calling us 02 8203 4160 or contact us via the handy online contact form below.