Your income is the foundation upon which your family’s financial plans are built and in most people’s lives there won’t be a larger asset to protect than their cumulative income. Consider this - a 40-year-old man currently earning $75,000 per annum with salary increases of 5% each consecutive year will earn over three and a half million dollars by the time he turns 65. When it’s put that way, your income is certainly worth insuring!
Life has a habit of throwing up hurdles, usually at the most inconvenient times. It’s impossible to know what’s going to happen in your life but insuring against potential problems reduces the risk that you may not achieve your goals.
Basically, to achieve your life plans you need to maintain your cash flow, so what happens if it should suddenly stop? Income protection insurance can replace 75% of your income if you can’t work due to accident or sickness and it is also tax-deductible.
It isn’t a replacement for workers’ compensation, sick leave or private health insurance. It is a long-term solution that should be tailored to work in concert with these and other insurance types.
Could this be you? Mark was a 40-year-old carpenter who fractured his leg in three places when he fell off a trampoline playing with his son. His financial circumstances were:
1. Rent $1800 per month
2. Child maintenance payments of $750 per month
3. School fees $500 per month (paid annually and due shortly)
4. General living expenses (food, electricity, petrol, etc) $1200 per month
5. Car repayments $420 per month.
Due to the severity of the break, Mark was off work for ten months. The accident cost him more than $50,000 in lost income and all of his savings. He borrowed from his ageing father to cover shortfalls such as school fees and rent. After his recovery, Mark found it difficult to work as a carpenter because his injury affected his ability to climb ladders and maintain adequate balance.
If Mark had income protection insurance with the appropriate conditions and terms he would have been able to recuperate without the stress of huge financial pressures. Additionally, he may have received ongoing partial income while he retrained for another career.
Consider your own circumstances in the event of misfortune and ask yourself honestly – how would my situation unfold? Then discuss your current protection and possible strategies with us on 1300 861 143 or stu@heart1stop.com.
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Disclaimer
This information is current as at 18/01/18.
This article has been prepared by Heart1Stop, a social media brand owned by Heart Mortgage Services and Heart Financial Advisers. The information contained in this article is an overview or summary only and it should not be considered a comprehensive statement on any matter nor relied upon as such. The views expressed here are not those of Heart1stop, Heart Mortgage Services, Heart Financial Advisers, shareholders, directors or staff and associated contractors and business associates. This article has been prepared without taking into account any person’s objectives, financial situation or needs. Because of this, you should, before acting on any information contained in this article, consider its appropriateness, having regard to your objectives, financial situation or needs. Any taxation information contained in this article is a general statement and should only be used as a guide. It does not constitute taxation advice and is based on current laws and their interpretation. Each individual’s situation may differ, and you should seek independent professional taxation advice on any taxation matters. While the information contained in this article may contain or be based on information obtained from sources believed to be reliable, it may not have been independently verified. Where information contained in this publication contains material provided directly by third parties it is given in good faith and has been derived from sources believed to be accurate at its issue date. It is not the intention of Heart1Stop or Heart Mortgage Services and Heart Financial Advisers that this publication be used as the primary source of readers’ information but as an adjunct to their own resources and training. To the maximum extent permitted by law: no guarantee, representation or warranty is given that any information or advice in this publication is complete, accurate, up to date or fit for any purpose; and no party of Heart1Stop or associated entities as mentioned is in any way liable to you (including for negligence) in respect of any reliance upon such information. This article may also contain links to websites operated by third parties ("Third Parties") who are not related to Heart1Stop. These links are provided for convenience only and do not represent any endorsement or approval by us.
