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Your ability to earn an income is your greatest asset. If you are not working, you need money working for you. It is your income which generates your lifestyle, puts food on the table and pays the bills. Therefore an income protection policy is one of the most important forms of insurances that you can have. Sick leave will only go so far and workers compensation only covers you if you sustain injury during working hours. Income protection will cover you in the event of an injury or illness that prevents you from working.
As those aged between 20 to 50 years have 1 in 3 chance of being off work for at least 3 months due to disability, it is worth paying 1 to 2% of your salary to ensure 75% of your gross income is protected. After all, no one likes to ask their family or friends for help when they go into debt and cannot pay their bills!
Have you ever considered how you would maintain your financial commitments if you were unable to work in the short or long-term because of illness or injury? Income protection insurance is worth considering as it can pay a proportion of your salary (up to 75%) for a period if you’re temporarily unable to work because of sickness or injury.
Matt is a 35-year old self-employed electrical contractor living in Melbourne’s outer suburbs. He is in a business partnership with his wife, Jenny, aged 30, and they have two young children, aged 6 and 4. Matt generates the income whilst Jenny organises Matt’s work appointments and keeps the books for the business. Matt generates an income of $110,000 after expenses. The couple have a $300,000 home mortgage, for which they pay $2,813 per month and a car lease for Matt’s work van, with repayments of $500 per month.
Now consider this: If Matt were permanently disabled due to illness or injury, his lost income until the age of 65 (assuming an inflation factor of 3%) would be just under $3.5 million. The amount of income protection that could be paid to Matt in the same period is just over $2.5 million. This amount would be paid over and above any other insurance he had for total and permanent disability or critical illness. In addition, Matt’s income protection premiums would be tax deductible based on his marginal tax rate.
Is it expensive? In Matt’s case, his after-tax annual premium would be less than 2% of his gross income after business expenses. This premium would be at blue-collar occupation rates, and would be significantly less for a white-collar professional.
Don’t put your income to chance: contact your 6-Point Insurance authorised representative today to protect your most valuable asset – your income!
Disclaimer:
These examples are approximate and may change from time to time. These examples should not be taken as advice supplied to people in a similar situation. The actual amount of your premium might change, depending on various factors and the terms and conditions of your policy. Life Insurance is available to approved customers only.
The examples include an indication of premium amount for Life Insurance only; Income protection is not included. 6-Point Insurance assists its customers to arrange insurance products in good faith but no advice is provided. Customers should seek their own independent advice as to amount of cover required, etc. Insurance premiums may be adversely affected due to applicant’s medical history.
Customers should obtain a copy of the relevant Product Disclosure Statement (PDS) relating to the product and consider the PDS before making any decision about whether to acquire the product.
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