Have you thought about what would happen if you were unable to work due to sickness, illness or injury?
Would you rely on the public health system? Or hopefully you have private health insurance that would help cover some costs?
Or maybe the reason you can’t work happened at work and you would be able to claim on workcover. These would all give you some level of financial relief.
At the end of the day however, you could end up being unable to work, and no income coming in whatsoever.
I hate to be all doom and gloom, but how would you pay your mortgage or rent?… What about groceries?… Electricity?…Gas?… Phone etc.
Your expenses won’t go away just because you aren’t able to earn an income.
A lot of people I talk to initially have the impression they would be ok financially because of the things I mentioned above. This is unfortunately not the case. Private health would cover ‘some’ of your health costs, the public health system may even cover you if serious enough to not be considered ‘elective’. Workcover MAY kick in with some payments IF the incident happened at work.
But what if the dominos don’t line up and your ‘ideal injury’ doesn’t happen. You’re left with no income to cover living expenses and this is where life gets seriously difficult financially.
The sad part is that whilst you are suffering financially, this causes you to suffer more emotionally and mentally and your health may further suffer due to these extra stresses.
How nice would it be to be able to concentrate on getting better from your injury or illness without financial stresses hanging over you.
So, you may read all of this and perhaps even get to a point where you understand and appreciate the importance of income protection, but that’s where the confusion often starts.
Where on earth do you start?!…. Options vary more than paint sample cards at Bunnings!
You may even hold some form of income protection (or perhaps referred to as salary continuance) in your super fund(s). You may have also seen the array of ads on TV telling us that cover is available to anyone, anytime, from only $1 per day (excuse me for a moment whilst I cough suspiciously).
An income protection policy has one purpose, and that is to provide you with an income if you are unable to work due to sickness or injury.
You may have the option of paying all, or some of the premiums for this cover from your superannuation fund.
This can help with your cashflow, but may not provide as many features or benefits if you compare to a policy held outside super.
If you do have some cover through your super fund, that is awesome. As having some form of cover is always better than none. HOWEVER, you need to be VERY careful if you are relying on forms of cover if you don’t know exactly what they do, or don’t, cover. There is some policies within certain super funds that are close to impossible to ever claim upon, so you would essentially be paying for something of little to no benefit at all.
We are passionate about educating clients (and anyone really), about the importance of personal insurances and how to protect the life you are building. If you would like to chat to us about your situation and what types of cover may be appropriate for you we would love to hear from you.
If you would like more information on income protection, here is a link to a brochure with some further details.
Posted by Bronwyn Tyrell – 3rd April 2016
*Roha Pty Ltd, As Trustee for The Tyrell Family Trust, Trading As: Vivid Accountants & Advisers, ABN 25 146 761 364 is an Authorised Representative of Count Financial Limited.
Bronwyn Tyrell is also an Authorised Representative of Count; Authorised Representative Number: 288117.
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