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Is your income adequately insured?

Is your income adequately insured?
24Apr2019

It's often the perception that "it won't happen to me!" But in reality, life's hurdles can happen to any of us, and usually at the most unexpected time. To ensure your financial and life goals aren't thrown out of the window when the unexpected happens, it's important to have adequate income protection.

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 income. Take a minute to think about this - a 40-year-old man currently earning a salary of $180,000, with increases of 3% each consecutive year will earn over six 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 which is why it’s so important to insure against potential problems to reduce the impact these may have on your financial 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 the premiums are 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 engineer who fractured his spine when he fell off a trampoline playing with his son. His financial circumstances were:
 
  1. Mortgage $4,500 per month
  2. Child maintenance payments of $750 per month
  3. School fees $1,500 per month (paid annually and due shortly)
  4. General living expenses (food, electricity, petrol, etc) $3,000 per month
  5. Car repayments $420 per month
 
Due to the severity of the fracture, Mark was off work for ten months. The accident cost him more than $150,000 in lost income and all of his savings. He borrowed from his ageing father to cover shortfalls such as school fees and mortgage cost. After his recovery, Mark found it difficult to work as an engineer because his injury affected his ability to sit for extended periods of time.
 
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. 
 
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 our team of financial advisors here at Carbon. We’re here to help make your financial goals a reality.
 
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