20 Oct Is Income Protection a Key Component of Your Wealth Plan?
Income protection is a key part of any wealth plan
We all aspire to get ahead in life, build wealth and retire comfortably, however building wealth relies on one fundamental thing, our income. It is our ability to earn an income that allows us to acquire assets, build wealth, provide for our families, and without it we can’t achieve any of these things. Living off government welfare is not going to achieve your goals of getting ahead in life. So it is therefore imperative that we protect this ability to earn an income, as this ability to work is our most valuable asset, bar none. This is where income protection comes in, if we lose our ability to earn an income, this insurance protects your ability to earn an income by paying you an ongoing benefit, until you are able to regain this ability, or until you reach retirement age.
In Australia there is a 1 in 3 chance that an individual will be off work for at least 3 months by the age of 65, which means there is a 33% chance you will need to make an income protection claim throughout your career. If you happen to be one of the unlucky percentage who is unable to work, what are your options? You can sell every asset you have acquired to try and pay for ongoing lifestyle expenses and potential recovery, you can apply for Centrelink disability pension, but the maximum benefit is under $12,000 per year, or if you have income protection, you will receive a monthly benefit, that allows you to keep your lifestyle, and continue to build assets and continue on with life as you know it.
Income protection is tax deductible and for the average Australian it is also very affordable.
A 35 year old male earning $50,000 can get income protection insurance for less than $500 per year, this is a very low cost to guarantee your salary, to make sure you can still feed your children and provide them with a good education, to be able to stay in your home if you are unable to work. Can you even insure your vehicle for that price?
Imagine you got hit by a car yesterday and your now a paraplegic lying in a hospital bed, unable to return to your job, and you only have a government income of $12,000 a year to rely on. What do you do from here? Will $12,000 cover the mortgage repayments, rates, groceries and other costs of living? Will it even pay the rent on a cheap apartment? For a cost as low as $500 per year, can you really risk leaving your family in such a financially burdened position?
Income Protection Options
At Wealth and Retirement Solutions we are an independent firm, which means we have access to all of the quality insurers in this country, and we have comparison software which allows us to calculate exactly which income protection policies are the most suitable for your situation and occupation, and in the event of an insurance claim, we take care of the whole process so you can focus on other aspects of your life, knowing your income is safe and secure. If you currently have income protection in place, make sure you get it reviewed regularly, if your income increases you should look at increasing your cover, and better priced, better qualities policies are regularly introduced to the market.